<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
BANCTEXAS GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Class B Common Stock, $0.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
059786400
-----------------------------------
(CUSIP Number)
Allen H. Blake
Senior Vice President
First Banks, Inc.
135 North Meramec
Clayton, Missouri 63105
(314) 854-4600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 31, 1994
-----------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/.
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 059786400 PAGE 2 OF 104 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FIRST BANKS, INC.
43-117-5538
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) /X /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, 00 (General Corporate Funds of Reporting Person)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MISSOURI, U.S.A.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
37,500,000
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
37,500,000
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
37,500,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100 PERCENT OF THE CLASS B COMMON (65.16 PERCENT OF ALL VOTING COMMON)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
HC, CO
- --------------------------------------------------------------------------------
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This statement relates to the recently-authorized Class B
Common Stock, par value $0.01 per share (the "Class B Common Stock"), issued by
BancTEXAS Group, Inc., a Delaware corporation ("BTX"), whose principal
executive offices are located at 13747 Monfort Drive, Dallas, Texas 75240.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by First Banks, Inc., a Missouri
corporation and registered bank holding company ("First Banks"). The
controlling shareholders of First Banks are (i) Mary W. Dierberg and James F.
Dierberg, II, trustees under the living trust of James F. Dierberg, II, dated
July 24, 1989, (ii) Mary W. Dierberg and Michael James Dierberg, trustees under
the living trust of Michael James Dierberg, dated July 24, 1989, (iii) Mary W.
Dierberg and Ellen C. Dierberg, trustees under the living trust of Ellen C.
Dierberg, dated July 17, 1992, and (iv) James F. Dierberg, trustee of the James
F. Dierberg living trust, dated October 8, 1985. Mr. James F. Dierberg and
Mrs. Mary W. Dierberg are husband and wife, and Messrs. James F. Dierberg, II,
Michael James Dierberg and Miss Ellen C. Dierberg are their children (the
"Dierberg Family").
The directors and executive officers of First Banks and their
positions with First Banks are as follows:
James F. Dierberg Chairman of the Board of Directors,
President and Chief Executive Officer
Allen H. Blake Senior Vice President, Chief
Financial Officer, Secretary and Director
John A. Schreiber Senior Vice President - Commercial
Banking
Thomas A. Bangert Vice President of Operations
Laurence J. Brost Vice President and Controller
Mark T. Turkcan Senior Vice President - Mortgage
Banking
Donald W. Williams Senior Vice President and Chief
Credit Officer
Donald Gunn, Jr. Director
George Markos Director
<PAGE> 4
The information required by this Item 2 with respect to First
Banks, the Dierberg Family and each of the above- named persons is attached to
this Schedule 13D as Exhibits 2A through 2N, and is incorporated herein by this
reference. The information disclosed in Exhibits 2A through 2N is included
pursuant to General Instruction C to Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The aggregate purchase price of the 37,500,000 shares of Class
B Common Stock covered by this Schedule 13D was $30,000,000. First Banks
purchased the Class B Common Stock with resources from its general corporate
funds ($3,000,000) and funds borrowed ($27,000,000) pursuant to its existing
Credit Agreement, as amended, with a group of unaffiliated commercial banks.
ITEM 4. PURPOSE OF TRANSACTION
On May 19, 1994, First Banks and BTX entered into a Stock
Purchase and Operating Agreement providing for, among other things, the
purchase by First Banks of the 37,500,000 shares of Class B Common Stock
covered by this Statement (the "Stock Purchase"). In connection with the
transactions contemplated by the Stock Purchase and Operating Agreement,
including the Stock Purchase, BTX distributed a proxy statement dated July 15,
1994 (the "BTX Proxy Statement") to its shareholders in connection with the
1994 Annual Meeting of Stockholders of BTX held on August 18, 1994, at which
the shareholders of BTX voted to approve the Stock Purchase and Operating
Agreement. The description of the Stock Purchase and the Stock Purchase and
Operating Agreement herein is qualified in its entirety by the text of the
Notice of Annual Meeting of Stockholders of BTX and attached BTX Proxy
Statement (which includes the complete text of the Stock Purchase and Operating
Agreement attached as Appendix I thereto) which is attached hereto as Exhibit 4
and is incorporated herein in its entirety by this reference.
The shares of Class B Common Stock covered by this statement
are being held with a view toward exercising a controlling influence over BTX.
(a) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 3: Election of Directors (Nominees)" (which begins on page 21 of Exhibit
4); and Appendix I to Exhibit 4.
(b) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 3: Election of
<PAGE> 5
Directors (Nominees)" (which begins on page 21 of Exhibit 4); and Appendix I to
Exhibit 4.
(c) None.
(d) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 3: Election of Directors (Nominees)" (which begins on page 21 of Exhibit
4); and Appendix I to Exhibit 4.
(e) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 2: Amendments to BTX's Certificate of Incorporation" (which begins on page
19 of Exhibit 4); "Proposal No. 3: Election of Directors (Nominees)" (which
begins on page 21 of Exhibit 4); Appendix I to Exhibit 4; and Appendix III to
Exhibit 4.
(f) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 3: Election of Directors (Nominees)" (which begins on page 21 of Exhibit
4); and Appendix I to Exhibit 4.
(g) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 2: Amendments to BTX's Certificate of Incorporation" (which begins on page
19 of Exhibit 4); "Proposal No. 3: Election of Directors (Nominees)" (which
begins on page 21 of Exhibit 4); Appendix I to Exhibit 4; and Appendix III to
Exhibit 4.
(h) None.
(i) None.
(j) See the following sections of Exhibit 4 hereto, which
are incorporated by reference herein: "Term of the Stock Purchase" (which
begins on page 8 of Exhibit 4); "Operations After the Stock Purchase; Potential
Effects on the Transaction" (which begins on page 18 of Exhibit 4); "Proposal
No. 2: Amendments to BTX's Certificate of Incorporation" (which begins on page
19 of Exhibit 4); "Proposal No. 3: Election of Directors (Nominees)" (which
begins on page 21 of Exhibit 4); Appendix I to Exhibit 4; and Appendix III to
Exhibit 4.
<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the close of business on August 31, 1994, First
Banks beneficially owned 37,500,000 shares of Class B Common Stock, or 100% of
such class of stock.
(b) First Banks beneficially owns 37,500,000 shares of
the Class B Common Stock and has the sole power to vote and dispose of such
shares.
(c) All transactions in the shares of Class B Common
Stock effected by First Banks during the past sixty (60) days are described in
Exhibit 5(c) attached hereto. All such shares were purchased pursuant to the
provisions of the Stock Purchase and Operating Agreement, a copy of which is
attached as Appendix I to the BTX Proxy Statement attached hereto as Exhibit 4.
(d-e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER
First Banks is controlled, through various family trusts, by
the Dierberg Family. See discussion at Item 2 above.
On May 19, 1994, First Banks and BTX entered into the Stock
Purchase and Operating Agreement with respect to the Class B Common Stock
covered by this Statement. See discussion at Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 4 - BTX Proxy Statement.
Exhibit 5(c) - Transactions in the Class B Common Stock
effected during the past sixty (60) days.
<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
FIRST BANKS, INC.
By: /s/ Allen H. Blake
--------------------------------
Allen H. Blake
Senior Vice President
Date: September 14, 1994
<PAGE> 8
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Page No.
- ---------- -------
<S> <C>
Exhibit 2A 9
Exhibit 2B 10
Exhibit 2C 11
Exhibit 2D 12
Exhibit 2E 13
Exhibit 2F 14
Exhibit 2G 15
Exhibit 2H 16
Exhibit 2I 17
Exhibit 2J 18
Exhibit 2K 19
Exhibit 2L 20
Exhibit 2M 21
Exhibit 2N 22
Exhibit 4 23
Exhibit 5(c) 104
</TABLE>
<PAGE> 1
Exhibit 2A
FIRST BANKS, INC.
State or Other Place of Organization: Missouri
Principal Business: Bank Holding Company
Address of Principal Business: 135 North Meramec,
Clayton, Missouri 63105
Address of Principal Office: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
<PAGE> 1
Exhibit 2B
JAMES F. DIERBERG (Chief Executive Officer, President and Chairman of the
Board of Directors of First Banks, Inc.)
Residence or Business Address: 39 Glen Eagles Drive, St.
Louis, Missouri 63124
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2C
MARY W. DIERBERG (Co-Trustee under the living trust of James F. Dierberg, II,
dated July 24, 1989, the living trust of Michael James Dierberg, dated July 24,
1989, and the living trust of Ellen C. Dierberg, dated July 17, 1992)
Residence or Business Address: 39 Glen Eagles Drive, St.
Louis, Missouri 63124
Principal Occupation or Employment: Housewife
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2D
JAMES F. DIERBERG, II (Co-Trustee under the living trust of James F. Dierberg,
II, dated July 24, 1989)
Residence or Business Address: 39 Glen Eagles Drive, St.
Louis, Missouri 63124
Principal Occupation or Employment: Student
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2E
MICHAEL JAMES DIERBERG (Co-Trustee under the living trust of Michael James
Dierberg, dated July 24, 1989)
Residence or Business Address: 39 Glen Eagles Drive, St.
Louis, Missouri 63124
Principal Occupation or Employment: Student
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2F
ELLEN C. DIERBERG (Co-Trustee under the living trust of Ellen C. Dierberg,
dated July 17, 1992)
Residence or Business Address: 39 Glen Eagles Drive, St.
Louis, Missouri 63124
Principal Occupation or Employment: Student
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2G
ALLEN H. BLAKE (Senior Vice President, Chief Financial Officer, Secretary and
Director of First Banks, Inc.)
Residence or Business Address: 2345 Kettington Road
Chesterfield, MO 63017
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2H
JOHN A. SCHREIBER (Senior Vice President, Commercial Banking, of First Banks,
Inc.)
Residence or Business Address: 11747 Parkshire
St. Louis, Missouri 63126
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2I
THOMAS A. BANGERT (Vice President of Operations of First Banks, Inc.)
Residence or Business Address: 12575 Conway Road
St. Louis, Missouri 63141
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2J
LAURENCE J. BROST (Vice President and Controller of First Banks, Inc.)
Residence or Business Address: 2028 Fairway Bend
St. Louis, Missouri 63017
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2K
MARK T. TURKCAN (Senior Vice President of Mortgage Banking of First Banks,
Inc.)
Residence or Business Address: 711 Bent Brook Road
St. Louis, Missouri 63122
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2L
DONALD W. WILLIAMS (Senior Vice President and Chief Credit Officer of First
Banks, Inc.)
Residence or Business Address: 18 Huntleigh Downs
St. Louis, Missouri 63131
Principal Occupation or Employment: Financial services
Name of Employer: First Banks, Inc.
Principal Business: Bank holding company
Address: 135 North Meramec,
Clayton, Missouri 63105
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2M
DONALD GUNN, JR. (Director of First Banks, Inc.)
Residence or Business Address: 11901 Olive Blvd.
St. Louis, Missouri 63141
Principal Occupation or Employment: Attorney
Name of Employer: Gunn & Gunn
Principal Business: Law Firm
Address: 11901 Olive Blvd.
St. Louis, Missouri 63141
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 2N
GEORGE MARKOS (Director of First Banks, Inc.)
Residence or Business Address: 1595 North Central Expressway
Richardson, Texas 75080
Principal Occupation or Employment: President
Name of Employer: Profit Management Systems
Principal Business: Financial Consultants
Address: 1595 North Central Expressway
Criminal Proceedings During Last 5 Years: None
Civil Proceedings During Last 5 Years: None
Citizenship: U.S.A.
<PAGE> 1
Exhibit 4
BTX Proxy Statement
<PAGE> 2
BANCTEXAS GROUP INC.
P. O. BOX 802527
DALLAS, TEXAS 75380-2527
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, AUGUST 18, 1994
To the Stockholders of BancTEXAS Group Inc.:
Notice is hereby given that the 1994 Annual Meeting of Stockholders (the
"Annual Meeting") of BancTEXAS Group Inc., a Delaware corporation ("BTX"), will
be held at The Harvey Hotel -- Addison, 14315 Midway Road, Dallas, Texas,
located approximately two miles north of Interstate 635 (LBJ Freeway), on
Thursday, August 18, 1994 at 10:00 a.m., Dallas, Texas time, for the following
purposes:
(1) To approve a transaction whereby BTX will issue 37,500,000 shares
of Class B Common Stock to First Banks, Inc. for total consideration of
thirty million dollars ($30,000,000.00) cash;
(2) To amend BTX's Restated Certificate of Incorporation (a) to
authorize the issuance of up to 60,000,000 shares of a new class of stock
to be designated as "Class B Common Stock", 37,500,000 shares of which are
to be issued in the transaction referred to in paragraph (1) above; (b) to
increase the number of authorized shares of BTX's existing common stock
from 50,000,000 to 100,000,000; (c) to enact certain other amendments to
the Certificate of Incorporation including an amendment authorizing
cumulative voting in the election of directors; and (d) to adopt a Restated
Certificate of Incorporation incorporating such amendments;
(3) To elect six directors to serve until the next Annual Meeting and
until their successors have been duly elected and qualified; and
(4) To transact any and all other business as may properly be
presented at the meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on July 14, 1994, as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournment(s)
thereof. The stock transfer books will not be closed. A list of stockholders
entitled to vote at the meeting will be available for examination at the main
office of BTX for ten (10) days prior to the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER, WHETHER OR
NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO PROMPTLY MARK, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED, SELF-ADDRESSED, STAMPED
ENVELOPE SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN
ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. YOUR
PROXY WILL BE RETURNED TO YOU IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER
PROVIDED FOR REVOCATION OF PROXIES ON PAGE 2 OF THE ENCLOSED PROXY STATEMENT.
PROMPT RESPONSE BY OUR STOCKHOLDERS WILL REDUCE THE TIME AND EXPENSE OF
SOLICITATION.
By Order of the Board of Directors,
/s/ RICHARD H. BRAUCHER
RICHARD H. BRAUCHER
Secretary
Dallas, Texas
July 15, 1994
<PAGE> 3
BANCTEXAS GROUP INC.
P. O. BOX 802527
DALLAS, TEXAS 75380-2527
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 18, 1994
---------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is being furnished to stockholders of BancTEXAS Group
Inc. ("BTX") in connection with the solicitation by the Board of Directors of
BTX of proxies to be voted at the 1994 Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Thursday, August 18, 1994, at the time and place
and for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders, and at any adjournment(s) thereof. This Proxy Statement and
applicable form of proxy is first being sent to the stockholders of BTX on or
about July 15, 1994.
The accompanying form of proxy is designed to permit each holder of BTX's
common stock, par value $.01 per share (the "Common Stock"), to vote for or
against each of the following proposals:
Proposal No. 1: To approve a transaction whereby BTX will issue 37,500,000
shares of a new class of common stock to be known as "Class B Common Stock"
to First Banks, Inc. for total consideration of thirty million dollars
($30,000,000.00) cash;
Proposal No. 2: To amend BTX's Restated Certificate of Incorporation (a) to
authorize the issuance of up to 60,000,000 shares of a new class of stock
to be designated as "Class B Common Stock", 37,500,000 shares of which are
to be issued in the transaction contemplated by Proposal No. 1 above; (b)
to increase the number of authorized shares of BTX's existing common stock
from 50,000,000 to 100,000,000; (c) to enact certain other amendments to
the Restated Certificate of Incorporation, including an amendment
authorizing cumulative voting in the election of directors; and (d) to
adopt a Restated Certificate of Incorporation incorporating such
amendments;
to vote for or withhold voting for any or all of the six nominees for election
as directors of BTX listed on the proxy (Proposal No. 3); and to authorize the
named proxies to vote in their discretion with respect to any other proposal
properly presented at the Annual Meeting.
As of July 14, 1994, the executive officers and directors of BTX were the
record owners of an aggregate of 121,288 shares of Common Stock (or .6% of the
total number of shares outstanding). BTX has been informed that all of such
shares will be voted in favor of Proposals No. 1, 2 and 3 at the Annual Meeting.
When a stockholder's proxy specifies a choice with respect to a voting
matter, the shares will be voted accordingly. If no such specifications are
made, the accompanying form of proxy will be voted at the Annual Meeting and any
adjournment(s) thereof: (i) FOR approval of the transaction whereby BTX will
issue 37,500,000 shares of Class B Common Stock to First Banks, Inc. as
described herein (see the discussion of PROPOSAL NO. 1 beginning on page 5
hereof); (ii) FOR approval of PROPOSAL NO. 2, the amendments to BTX's Restated
Certificate of Incorporation as discussed under the heading "Proposal No.
2 -- Amendments to BTX's Certificate of Incorporation"; (iii) FOR the election
of the nominees listed herein under the caption "PROPOSAL NO. 3: Election of
Directors"; and (iv) at the discretion of the proxies on any other business
which may be properly presented at the Annual Meeting and any adjournment(s)
thereof. However, proxies which are voted against Proposal No. 1, Proposal No. 2
or Proposal No. 3 will not be voted pursuant to the discretionary authority
granted in such proxies in favor of an adjournment of the meeting for the
purpose of soliciting further proxies in support of such proposal.
<PAGE> 4
BTX encourages the personal attendance of its stockholders at the Annual
Meeting, and execution of the accompanying proxy will not affect a stockholder's
right to attend the Annual Meeting and to vote in person. Any stockholder giving
a proxy has the right to revoke it by giving written notice of revocation to the
Secretary of BTX at its principal executive offices at any time before the proxy
is voted, or by executing and delivering a later-dated proxy, or by attending
the Annual Meeting and voting his or her shares in person. No such notice of
revocation or later-dated proxy, however, will be effective until received by
BTX at or prior to the Annual Meeting. Such revocation will not affect a vote on
any matters taken prior to receipt of the revocation. Mere attendance at the
Annual Meeting will not of itself revoke the proxy.
The total cost of the solicitation of proxies pursuant to this Proxy
Statement will be borne by BTX. Proxies may be solicited by directors, officers
and employees of BTX without special remuneration. BTX has engaged the services
of a proxy solicitation firm, Beacon Hill Partners, Inc., and has agreed to pay
the sum of $7,500 (plus the reimbursement of expenses) to such firm, for
assistance in the solicitation of proxies. Banks, brokerage houses and other
custodians, nominees and fiduciaries who forward soliciting material to the
beneficial owners of shares of Common Stock entitled to vote at the meeting will
be reimbursed by BTX for their out-of-pocket expenses incurred in this
connection. In addition to the mails and other delivery services, proxies may be
solicited by personal interviews, telephone or telegraph.
The Annual Report to Stockholders covering BTX's fiscal year ended December
31, 1993, including audited financial statements, has been previously mailed.
The Annual Report does not form any part of the proxy solicitation material.
Additional copies of the 1993 Annual Report to Stockholders may be obtained
without charge upon written request to Richard H. Braucher, Senior Vice
President, General Counsel and Secretary, BancTEXAS Group Inc., P.O. Box 802527,
Dallas, Texas 75380-2527.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
GENERAL
The Board of Directors of BTX has fixed the close of business on July 14,
1994, as the record date (the "Record Date") for the Annual Meeting. Only
holders of record of outstanding shares of Common Stock at the close of business
on the Record Date are entitled to notice of, and to vote at, the Annual Meeting
or any adjournment(s) thereof. At the close of business on the Record Date,
there were issued and outstanding 20,047,025 shares of Common Stock. The Common
Stock is the only class of stock outstanding and is the only class of stock
entitled to vote at the Annual Meeting.
A stockholder is entitled to one vote, in person or by proxy, at the Annual
Meeting for each share of Common Stock held of record in his or her name at the
close of business on the Record Date. The presence, in person or by proxy, of
the holders of a majority of the issued and outstanding shares of Common Stock
entitled to vote at the Annual Meeting or any adjournment(s) thereof is
necessary to constitute a quorum to transact business at the Annual Meeting and
any adjournment(s) thereof.
On each proposed action, proxies marked as withheld votes or abstentions
and broker non-votes will not be voted but will be treated as present and
entitled to vote. Such proxies will therefore have the same effect as votes
against the proposed action. Directors will be elected by a plurality of the
votes of the shares present in person or represented by proxy and entitled to
vote on such election.
2
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of June 30, 1994, certain information
with respect to the beneficial ownership of the Common Stock of BTX by each
person known to the company to be the beneficial owner of more than five percent
of the outstanding Common Stock, by each director, by certain executive officers
and by all executive officers and directors of BTX as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
RELATIONSHIP OF BENEFICIAL PERCENT
NAME OF TO THE OWNERSHIP OF OF
BENEFICIAL OWNER COMPANY COMMON STOCK(1) CLASS(13)
- ------------------------- ----------------------------------------- ----------------- ---------
<S> <C> <C> <C>
Richard L. Brown......... Director 108,525(2) *
Nathan C. Collins........ Chairman of the Board, President and 971,600(3) 4.74%
Chief Executive Officer; Director
Charles A. Crocco, Jr.... Director 109,100(4) *
Joseph J. Leszczynski.... Director 83,000(5) *
Thomas A. Stanzel........ Director 115,500(6) *
Edward T. Story, Jr...... Director 107,750(7) *
Richard H. Braucher...... Senior Vice President, Secretary & 50,413(8) *
General Counsel of BTX
D. Kert Moore............ Senior Vice President, Treasurer and 27,250(9) *
Chief Financial Officer of BTX
David F. Weaver.......... Regional President -- South of BankTEXAS 75,400(10) *
N.A.
Jerry V. Garrett......... Senior Vice President, Consumer Lending 45,000(11) *
of BankTEXAS N.A.
John G. Sprengle......... Senior Vice President, Chief Credit 61,000(12) *
Officer of BankTEXAS N.A.
All executive officers
and directors as a
group (11 persons)..... 1,754,538 8.14%
</TABLE>
- ---------------
* Less than one half of one percent.
(1) Includes shares subject to vested stock options granted under the 1990
Stock Option Plan. Except for Mr. Moore, 100% of the options granted in
1990 are vested and could be exercised at any time by the optionee.
(2) Brown has a vested option covering 100,000 shares; he owns directly 8,525
shares.
(3) Collins has a vested option covering 900,000 shares; he owns directly
71,600 shares.
(4) Crocco has a vested option covering 100,000 shares; he owns directly 9,100
shares.
(5) Leszczynski has a vested option covering 75,000 shares; he owns directly
8,000 shares.
(6) Stanzel has a vested option covering 100,000 shares; he owns directly
15,500 shares.
(7) Story has a vested option covering 100,000 shares; he owns directly 7,750
shares.
(8) Braucher has a vested option covering 50,000 shares; he owns directly 413
shares.
(9) Moore has a vested option covering 27,250 shares.
(10) Weaver has a vested option covering 75,000 shares; he owns directly 400
shares.
(11) Garrett has a vested option covering 45,000 shares.
(12) Sprengle has a vested option covering 61,000 shares.
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<PAGE> 6
(13) For purposes of calculating the indicated percentages, it is assumed that
Mr. Collins' options are exercised and the number of shares outstanding are
adjusted to include the shares to be issued on such exercise. With respect
to executive officers and directors as a group, all vested options held by
persons in the group are assumed to be exercised, and the number of shares
outstanding is adjusted to include all of the shares to be issued upon the
exercise of all of such options.
PROPOSAL NO. 1: APPROVAL OF PROPOSED TRANSACTION WITH FIRST BANKS, INC.
The Board of Directors of BTX unanimously recommends that the proposed
transaction whereby First Banks, Inc. ("First Banks") will acquire 37,500,000
shares of Class B Common Stock, par value $.01 per share, for total
consideration of $30 million, be approved by BTX's stockholders.
In order for the proposed transaction to be consummated, it is necessary
for stockholders to approve both Proposal No. 1 which is discussed in detail in
this portion of the Proxy Statement, and Proposal No. 2, which involves
amendments to BTX's Restated Certificate of Incorporation which would, among
other things, authorize the issuance of a new class of voting stock, to be
designated "Class B Common Stock", shares of which are to be issued to First
Banks. Reference is made to the discussion of such amendments under the heading
"PROPOSAL NO. 2 -- Amendments to BTX's Certificate of Incorporation," for an
explanation of the proposed amendments.
Included with this Proxy Statement are the complete texts of the following
three documents which are discussed in this section and in the section
describing Proposal No. 2.
<TABLE>
<S> <C>
Appendix I -- Stock Purchase and Operating Agreement dated May 19, 1994 by and
between BancTEXAS Group Inc. and First Banks, Inc. (referred to herein
as the "Agreement").
Appendix II -- Opinion of McKenna & Company, BTX's investment banking firm, regarding
the fairness of the proposal transaction with First Banks (referred to
herein as the "Opinion of Financial Advisor.")
Appendix III -- Restatement of the Certificate of Incorporation of BancTEXAS Group Inc.
as of , 1994, setting forth the provisions of the BTX
Restated Certificate of Incorporation as the same will read when
amended as discussed under the heading "PROPOSAL NO. 2: Amendments to
BTX's Certificate of Incorporation." The proposed restatement,
including the proposed amendments, is referred to herein as the
"Proposed Certificate of Incorporation."
</TABLE>
BACKGROUND OF BTX
BTX was the subject of a major restructuring in 1987 (the "1987
Restructuring") which followed several years of substantial losses in the
subsidiary banks then owned by BTX. The transaction involved "open bank
assistance" from the Federal Deposit Insurance Corporation (the "FDIC") whereby
none of the subsidiary banks failed, but the FDIC contributed $150 million and
private parties invested $50 million in order to recapitalize BTX. Unlike most
FDIC-assisted transactions, the subsidiary banks did not transfer, or receive
financial protection against losses arising out of, their nonperforming loans
and other assets. In exchange for the financial assistance which it provided,
the FDIC received warrants to purchase 1,970,033 shares of common stock at an
exercise price of $5.41.
BTX emerged from the 1987 Restructuring with a relatively high level of
capital (8.8% of total assets as of December 31, 1987), but also with an
inordinate amount of nonperforming assets (25% of total loans and foreclosed
property at December 31, 1987). BTX continued to experience substantial losses
which were attributable to several factors, including principally (i) the
continuing drag on earnings from nonperforming and underperforming assets
retained by BTX's subsidiary banks; (ii) the extended recession in Texas and the
related failures of numerous financial institutions throughout the state, which
had a depressing effect on collateral values and the ability of some borrowers
to repay loans; and (iii) increased competition arising from the entry into the
Texas banking market of large, out of state financial institutions with
aggressive growth strategies. In 1990 BTX's largest subsidiary bank failed, and
BTX ultimately agreed to reduce the exercise
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<PAGE> 7
price of the warrants held by the FDIC from $5.41 to $.05 in consideration for
the FDIC's decision not to assess BTX's remaining bank subsidiaries for the
costs attributable to that bank failure.
Since 1987, in order to avoid the types of credit quality problems which
had adversely affected BTX (and most large Texas banking organizations) in the
1980's, BTX focused its lending efforts on establishment of a low-cost, high
volume consumer installment lending program principally involving purchases of
automobile loans from dealers. This process has produced steady improvement in
the credit quality of the loan portfolio, but also led to relatively narrow net
interest margins as compared with higher yielding, but riskier, types of loans.
BTX has sought for the past several years to attract capital from outside
sources and to increase its profitability by growth and diversification of its
operations through acquisition of additional banking operations and/or companies
engaged in complementary businesses such as finance companies. To date, most of
BTX's efforts have been concentrated on potential target banks operating within
market areas served by the existing offices of the Bank (i.e., Houston, Dallas
and McKinney, Texas) because of the operational advantages of increasing the
assets and personnel under management within a compact geographic area. Aside
from the 1992 acquisition for BTX common stock of First Bank/Las Colinas, a
small, well-capitalized bank in Irving, Texas, BTX has been unable to complete
any acquisitions.
BTX has found that a significant impediment to some potential acquisitions
has been the inability to offer cash to potential sellers of banks. Although BTX
common stock can potentially be issued in exchange for shares in a bank to be
acquired (sometimes in a tax-free reorganization that offers certain tax
advantages to sellers), several potential sellers have rejected BTX's overtures
because they preferred to consider cash-only transactions.
BTX continues to believe that the opportunity for expansion through prudent
acquisition of additional banks represents the most effective means of
increasing its market share and achieving desirable diversification of assets
and economies of scale. While many small and mid-sized Texas banking
organizations have been acquired by larger companies in the past few years,
Texas still has a substantial number of independent banks, and there are a
significant number of such banks within, or near, the Bank's existing market
areas. The principal purpose of the proposed transaction for both BTX and First
Banks is to enable BTX to offer cash when appropriate to prospective sellers of
banks determined by BTX to be desirable acquisition candidates. It is also
contemplated that BTX will be in a position to acquire banks for stock if a
prospective seller prefers that alternative. In general, the availability of
cash is intended to increase BTX's flexibility in offering cash, stock or a
combination thereof in order to make future acquisition offers as attractive as
possible to prospective sellers.
DESCRIPTION OF FIRST BANKS
First Banks, a Missouri corporation, is a privately controlled bank holding
company headquartered in St. Louis County, Missouri. As of December 31, 1993
First Banks had approximately $2 billion in assets, $1.36 billion in total loans
(net of unearned discount), $1.78 billion in total deposits and $201.8 million
in stockholders' equity. First Banks currently operates primarily in Missouri
and Illinois, through two subsidiary banks and two subsidiary thrift
institutions.
DISCUSSIONS AND NEGOTIATIONS WITH FIRST BANKS
In January, 1994 the majority owner of a Dallas bank made it known that he
would be interested in selling the bank. A group of possible investors were
invited to an exploratory meeting held February 4, 1994. Mr. Collins and one of
BTX's outside directors were included in discussions of a possible transaction
whereby the target bank would be acquired by BTX and, simultaneously, a proposed
investor group (which was in the process of being assembled but was subsequently
determined by BTX not to be viable) would invest approximately $10 million in
BTX in order to fund that acquisition. Also attending this meeting was James F.
Dierberg, Chairman of the Board and Chief Executive Officer of First Banks. As
that meeting proceeded, neither Mr. Dierberg nor Mr. Collins found the proposed
transaction or the affiliation with the other potential investors appealing, but
they believed that the mutual interests of BTX and First Banks could be better
served
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<PAGE> 8
by further discussions between First Banks and BTX. That evening Messrs.
Dierberg and Collins began acquainting each other regarding their respective
companies. That discussion centered on the BTX's vision of expansion in Texas
and First Bank's pattern of acquisitions and profitable growth in the Missouri
and Illinois markets. The following day, discussions continued and the two
visited the three Dallas area branch banks of BTX.
On February 8 Mr. Collins traveled to St. Louis for two reasons. First, he
toured several of First Banks' branches and its operations center and met with
several of its senior officials. Second, accompanied by a tax consultant, Mr.
Collins explained to Mr. Dierberg and First Banks' chief financial officer the
ramifications of the sizeable net operating losses that BTX had accumulated over
the years. The parties executed mutual confidentiality agreements and First
Banks delivered a due diligence request to Mr. Collins, specifying various
records and documents of BTX which it desired to review. These were subsequently
supplied to First Banks.
On February 15 Mr. Collins returned to St. Louis with John J. McKenna, a
principal of McKenna & Company, BTX's investment banking firm, to explore a
variety of structures for possible transactions involving First Banks and BTX.
During the week of February 21 First Banks' due diligence team traveled to
Dallas and reviewed the present condition of BTX.
At its regular meeting on February 17, the Board of Directors of BTX
created a Capital Formation Committee consisting of three outside directors,
Messrs. Crocco, Leszczynski and Story (as Chairman) to be actively involved in
reviewing any proposals received from First Banks or others and to be available
on short notice, if necessary, to address or respond to potential proposals
prior to consideration by the full Board of Directors. At the same Board meeting
Mr. Collins reported the substance of his two meetings with Mr. Dierberg. While
no proposal had been received from First Banks, First Banks had expressed
interest in making a substantial capital investment in BTX if these funds could
be utilized by BTX to make advantageous acquisitions of other Texas banks or
other financial institutions. The Board reviewed the implications of such an
investment and preliminarily determined that the benefits to BTX and its
existing stockholders from such a transaction could outweigh any negative
implication such as control by a single stockholder. The consensus of the Board
was that, with a sizeable capital infusion, BTX's capital position would be
greatly enhanced, its profitability could be significantly increased, its
ability to complete acquisitions would be markedly improved and additional
efficiencies of operations could result. Accordingly, the Board directed Mr.
Collins to pursue further discussions with First Banks and to keep the Board,
and particularly the members of the Capital Formation Committee, advised of the
progress of future discussions.
During the first week of March, Mr. Dierberg called Mr. Collins to indicate
an interest in investing between $15 and $30 million in BTX if a proper
structure could be developed and a satisfactory price agreed upon. First Banks'
investment bankers, Stifel, Nicolaus & Company Incorporated had been retained to
assist Mr. Dierberg with future negotiations. On March 7, 1994 an incomplete
term sheet was presented to BTX by First Banks, outlining a possible investment
in BTX ranging between $20 and $30 million.
On March 16, Mr. Dierberg came to Dallas and met with the BTX's directors
informally to discuss his vision of how a combination of First Banks and BTX
could be advantageous, especially by the use of First Banks' capital infusion
and its broader array of products to increase the size and profitability of BTX.
BTX's Capital Formation Committee met on March 17 with Mr. McKenna and John
Daniels, BTX's special counsel. The committee reviewed in detail the company's
history and financial progress between 1987 and 1994. In particular, it
concentrated on the recent unprofitable status of BTX and the reasons therefor.
With assistance from Mr. McKenna, the committee reviewed the list of financial
institutions with which BTX or its authorized representatives had had contacts
regarding a merger or acquisition, or an injection of capital, and then analyzed
the reasons why none of these contacts (except First Bank/Las Colinas) had led
to completed transactions. The committee requested that both Messrs. Collins and
McKenna prepare written reports on this subject for the committee to review at a
future meeting.
Later that same day, Mr. Dierberg attended a portion of BTX's Board
meeting. At this time he shared his goals and objectives related to a possible
capital investment in BTX. In response to a question, he agreed to prepare and
submit to BTX's Board of Directors his suggestions regarding ways by which First
Banks could
6
<PAGE> 9
assist BTX to become more profitable, including those services which First Banks
now offers in its markets which could in the future be offered by BTX in Texas.
He also expressed his philosophy with regard to possible future acquisition
activities in Texas.
On April 13, Messrs. Collins and McKenna returned to St. Louis to meet with
First Banks and its investment bankers in an attempt to create a sharper focus
regarding the nature of the transaction being considered. At that time BTX
informed First Banks that its original offered price of $.75 per share and
certain other terms were unsatisfactory to BTX. BTX said that the price needed
to be higher, and that BTX would make a counter-offer containing other terms and
conditions that BTX desired be included in any possible transaction. In the
discussions that followed, Messrs. Dierberg and Collins reached the conclusion
that a proposed investment of approximately $30 million would be appropriate.
On April 21, the Capital Formation Committee met and received detailed
reports from Mr. Collins and Mr. McKenna regarding their discussions and
negotiations with First Banks. They reviewed with the committee the structure
which had been discussed, including the fact that a possible price of $.80 per
share had been discussed but not agreed to, and the pricing options for an
antidilution provision that First Banks had suggested. They also explained that
First Banks had requested a "lockup" option and a breakup fee in the event that,
after an agreement had been executed, BTX failed to consummate the transaction.
Finally, they described the regulatory conditions which, in the opinion of First
Banks, made it imperative that First Banks' percentage ownership of BTX voting
stock never be reduced below 50%.
The Capital Formation Committee also reviewed: (1) the written reports from
Mr. Collins and McKenna & Company detailing their merger, acquisition and
capital formation efforts; and (2) financial information related to First Banks
as well as pro forma information prepared by McKenna & Company. These projected
the financial benefit to BTX and its stockholders which might reasonably be
anticipated from a capital injection of $30 million as well as the additional
benefits which could result from both efficiencies of scale and enhanced
earnings which could result from an affiliation with First Banks.
On the same day BTX's Board of Directors reviewed the reports and data
which the Capital Formation Committee had received regarding First Banks and its
possible capital investment in BTX. The directors also discussed whether a
rights offering directed at BTX's current stockholders, either independently or
in conjunction with a capital infusion from First Banks, might be reasonably
expected to generate a meaningful amount of new capital. In this regard, Mr.
McKenna was requested to study this issue and report promptly. The Board
outlined for Messrs. Collins and McKenna its positions on several of the
unresolved issues being discussed with the representatives of First Banks and
authorized the communication of these to Mr. Dierberg. The Board indicated its
willingness to continue serious discussions and negotiations with First Banks
and urged that a draft of a proposed stock purchase agreement be prepared so
that both parties could better understand on which issues they were close to
agreement and where the two parties had clearly divergent positions or views.
On May 6, BTX received a draft of the Agreement, which had been prepared by
First Banks' legal counsel. Senior officials of BTX and Messrs. McKenna and
Daniels reviewed this thoroughly and prepared written comments and revisions
incorporating BTX's suggested changes thereto, which were transmitted to First
Banks' counsel on May 11 and 12. These comments and suggested revisions were
also transmitted to BTX's directors to keep them apprised of the status of
negotiations.
On May 13, representatives of BTX and Messrs. McKenna and Daniels conducted
a lengthy telephone conference call with representatives of First Banks and its
counsel. At this time the parties freely exchanged their ideas on numerous
provisions contained in the document, stated their respective positions on each
and, in some cases, were able to reach mutual agreement. At the end of that
conference call, there were a number of yet unresolved issues.
On the evening of May 13, a telephone meeting of the Capital Formation
Committee was convened in order for Messrs. Collins, Daniels and McKenna to
inform the committee members regarding the unresolved issues and to seek their
guidance concerning the appropriate method of proceeding with further
negotiations. After discussion and consideration, the Capital Formation
Committee determined BTX's position regarding
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<PAGE> 10
each of these unresolved issues and directed Mr. Daniels to communicate those
positions to First Banks' counsel on the next morning.
On May 14, following the communication between Mr. Daniels and First Banks'
counsel, Messrs. Collins and Dierberg had a series of telephonic conferences
regarding these issues. Many of the remaining issues were resolved that day by
Messrs. Collins and Dierberg, as each conferred separately with their respective
advisors and Mr. Collins conferred with members of the Capital Formation
Committee. Tentative agreement was reached by the parties, subject to
satisfactory revisions of the Agreement by legal counsel, and final review by
and approval of all terms by their respective Board of Directors (and, in BTX's
case, by the members of the Capital Formation Committee).
As a result of the negotiations regarding the terms of the Agreement, there
were numerous changes made in the provisions of the Agreement from the specific
provisions initially suggested by First Banks in the draft of the Agreement that
was presented to BTX on May 6. The vast majority of such changes were not
material. Those changes believed by BTX to represent material differences
between the terms as proposed by First Banks on May 6 and the terms of the
Agreement related to (i) limitations of the scope of some of the representations
and warranties given by BTX; (ii) additions to the representations and
warranties given by First Banks; (iii) narrowing of the scope of some of the
conditions which must be satisfied prior to the consummation of the proposed
transaction; (iv) elimination of a provision that would have purported to limit
the circumstances under which BTX might be put in a position of considering
competing offers, and addition of provisions recognizing the fiduciary duties of
BTX's directors in the event of the receipt by BTX of a competing proposal or an
inquiry from another potential investor or acquirer; (v) the amount and
composition of a "break-up" fee which would become payable to First Banks under
certain circumstances, and the specific occurrences which would make such a fee
payable; (vi) the addition to the proposed amendments to the Proposed
Certificate of Incorporation of a provision requiring prior approval of the
holders of shares of BTX's existing common stock of any change in the terms of
the Class B Common Stock; (vii) a reduction from 10 years to 7 1/2 years of the
period during which First Banks will have the right to purchase at a price
determined by formula additional shares of Class B Common Stock or of Common
Stock, and related changes in the formula for determining the future purchase
price for such shares; (viii) deletion of a proposal that would have required
BTX to acquire, prior to closing of the proposed transaction, the warrants now
owned by the FDIC; and (ix) revisions to certain of the limitations on BTX's
business operations prior to closing to accommodate BTX's need to engage in
certain types of transactions on an ongoing basis. Additional information
regarding the provisions of the Agreement is set forth under the heading "Terms
of the Stock Purchase" below.
On May 18, the Board of Directors of First Banks met, reviewed and
considered the final version of the Agreement. This Board unanimously approved
the Agreement at that meeting.
On May 19, the Board of Directors of BTX met and reviewed and considered
the final version of the Agreement. During this meeting they consulted with
Messrs. Daniels and McKenna. Pursuant to the recommendations of the Capital
Formation Committee, the BTX Board of Directors unanimously approved the
Agreement and authorized Mr. Collins to execute it on behalf of BTX.
BTX and First Banks executed the Agreement on May 19, 1994 and issued a
joint news release describing the terms of the Stock Purchase.
TERMS OF THE STOCK PURCHASE
BTX and First Banks executed the Agreement on May 19, 1994. The following
discussion is a summary of the material terms and conditions contained in the
Agreement and is qualified in its entirety by the text of the Agreement, which
is incorporated herein by reference and appears as Appendix I to this Proxy
Statement.
The Agreement provides that First Banks is to purchase 37,500,000 shares of
a new class of BTX capital stock, to be designated "Class B Common Stock"
(referred to in this discussion as the "Class B Stock"), as distinguished from
the outstanding common stock now owned by BTX's stockholders and traded on the
New York Stock Exchange ("NYSE"), (which is referred to in this discussion as
"Regular Common Stock") for
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<PAGE> 11
$30,000,000, or $.80 per share (the "Stock Purchase"). Each share of Class B
Stock to be issued to First Banks will be convertible after five years at First
Banks' option into one share of Regular Common Stock. In addition, the Proposed
Certificate of Incorporation provides that the Class B Stock may be converted
into Regular Common Stock by the BTX Board of Directors in its sole discretion
(i.e., without First Banks' approval) if it determines that legislation or
regulations are enacted or any judicial or administrative determination is made
which would prohibit the listing, quotation or trading of the Regular Common
Stock on the NYSE or the National Association of Securities Dealers Automated
Quotation System because of the existence of more than one class of outstanding
BTX common stock, or that the same would otherwise have a material adverse
effect on BTX. BTX does not have any reason to believe that such mandatory
conversion of the Class B Stock will be necessary or appropriate.
The Class B Stock will not be registered with the SEC or listed for trading
on the NYSE for at least five years. Thereafter, First Banks will have the right
to require BTX to register with the SEC for resale all or a portion of the
shares of Regular Common Stock to be obtained by First Banks upon conversion of
its Class B Stock. First Banks also agreed to significant restrictions on any
transfer of the Class B Stock for the first five years of its ownership, so
that, unless a proposed transfer is presented to and approved by a committee of
the BTX Board of Directors consisting entirely of directors who are not
directors, officers or employees of First Banks or its subsidiaries (other than
BTX), the transfer may only be made to a subsidiary or affiliated entity of
First Banks. The purpose of these restrictions is to provide an assurance to BTX
stockholders that First Banks intends to hold the shares as a long term
investor.
The terms of the Class B Stock are to be established by amendments to BTX's
Certificate of Incorporation which must be approved by BTX's stockholders; the
substance of the proposed amendments is described in this Proxy Statement under
the heading "PROPOSAL NO. 2: Amendments to BTX's Certificate of Incorporation."
In order to assure that such terms will not be changed so as to affect adversely
the holders of Regular Common Stock, the amendments provide that such terms
cannot be amended for five years unless any amendments are approved by holders
of a majority of the outstanding shares of Regular Common Stock, voting as a
separate class. This requirement is in addition to any other vote required by
applicable law.
The Class B Stock will have dividend rights that are inferior to the
Regular Common Stock, although it is not contemplated that BTX will be in a
position to pay dividends in the near future. Under an agreed formula, when BTX
is in a position to pay dividends and if the Board of Directors determines that
it is appropriate to declare and pay them, holders of the Regular Common Stock
must be paid three cents per share per year before any dividends are paid on
Class B Stock. Any additional dividends would be paid in equal amounts per share
to holders of Regular Common Stock and Class B Stock.
First Banks has indicated that it intends to maintain in excess of 50%
ownership of the total number of shares of BTX voting stock issued and
outstanding. In that regard, certain federal regulations applicable to bank
holding companies would penalize First Banks if its percentage ownership were to
decline below 50% by making the portion of its capital invested in BTX
ineligible for inclusion in the amount of First Banks' capital that must be
maintained to satisfy regulatory requirements. To address this issue, BTX and
First Banks agreed that, for a period of 7 1/2 years following the consummation
of the Stock Purchase, if BTX issues additional shares of Regular Common Stock
or another voting security, First Banks will have the right to purchase
additional shares of Class B Stock or, at its option, shares of Regular Common
Stock so as to maintain at least 55% percent ownership of the total number of
voting shares to be outstanding on a fully-diluted basis. The price was set
according to a formula based on the book value per share of the Regular Common
Stock and the Class B Stock at the time of future issuances of stock. For five
years, First Banks will be required to pay 106.67% of tangible common equity per
primary share if it exercises its right to maintain the 55% ownership level. In
the sixth year the price will increase to the lesser of 113% of BancTEXAS'
tangible common equity per primary share or the market price per share.
Thereafter, the price will increase to the lesser of 120% of BTX's tangible
common equity per primary share or the market price.
It should be noted that this provision protecting First Banks against
future dilution of its control (which appears as Section 6.02 of the Agreement)
will only become operative in the event that BTX decides to issue additional
voting stock. It was included in the Agreement in recognition of the possibility
that BTX will in
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<PAGE> 12
future years be issuing additional shares of Regular Common Stock, either to
raise capital through the sales of stock or to be issued in acquisition
transactions in exchange for shares in acquired banks. From BTX's perspective,
the provision is intended to make such future stock issuances feasible while
addressing First Banks' requirement that it maintain majority ownership.
The Agreement provides that, pending completion of the Stock Purchase, BTX
and its subsidiaries will generally conduct their businesses in the ordinary
course. Further, BTX will not, without the prior approval of First Banks, engage
in various specified categories of transactions and will refrain from other
types of transactions involving amounts above certain specified dollar limits.
These limitations are set forth in Section 4.01 of the Agreement. BTX does not
anticipate that any of such limitations will interfere with its ongoing business
activities during the period prior to completion of the Stock Purchase and, in
any event, BTX expects that First Banks would agree to permit any transaction
exceeding such limitations if it would be desirable and prudent to engage in the
transaction.
The Stock Purchase is subject to the satisfaction or waiver of various
conditions before the respective parties are required to proceed to consummate
the transaction. In the case of First Banks, these conditions are as follows:
(i) the truthfulness on the closing date of the representations and
warranties made by BTX in the Agreement;
(ii) the compliance by BTX with all of its obligations under the
Agreement;
(iii) the absence of any litigation or administrative proceeding
wherein an unfavorable judgment would have any of the following
consequences: prevention or inhibition of the Stock Purchase, causing the
rescission of any of the transactions incident thereto, adversely affecting
First Banks' right to own the Class B Stock, adversely affecting the right
of BTX or its subsidiaries to own its assets or operate its businesses,
causing the Regular BTX Common Stock to cease to be listed on the NYSE
(unless BTX causes such Common Stock to be listed on the American Stock
Exchange or to be eligible for trading in the NASDAQ National Market
System), holding one or more directors of BTX liable for a breach of their
fiduciary duties in connection with the Agreement, or adversely affecting
the financial condition, results of operations or business or prospects of
BTX and its subsidiaries taken as a whole;
(iv) the absence of any statutory, regulatory or administrative action
(an "Adverse Regulatory Action"), including enactment of a statute,
adoption of a rule or regulation or the entry of an order which would make
the Stock Purchase illegal;
(v) the receipt of all necessary regulatory approvals in order to
permit the Stock Purchase to be consummated, including the approvals of
BTX's stockholders and of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") and the Texas Department of Banking;
(vi) the receipt by First Banks of all documents required to be
received from BTX, in form and substance reasonably satisfactory to First
Banks (these documents include the requisite amendments to BTX's
Certificate of Incorporation as described in detail elsewhere in this Proxy
Statement, amendments to BTX's Bylaws, and a legal opinion of counsel to
BTX with respect to specified matters);
(vii) the absence of any adjustment in the number of shares of Regular
Common Stock to be received by the FDIC upon exercise of warrants held by
the FDIC to purchase 1,970,033 shares; and
(viii) the receipt by BTX of an opinion of BTX's investment banking
firm, McKenna & Company, to the effect that the Stock Purchase, considered
as a whole, is fair from a financial point of view to BTX and its
stockholders. The requisite opinion has been received by BTX and is
discussed herein under the heading "Opinion of Financial Advisor"; the full
text of such opinion appears as Appendix B to this Proxy Statement.
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<PAGE> 13
The obligation of BTX to consummate the Stock Purchase is subject to
the satisfaction or waiver of the following conditions:
(i) the truthfulness on the closing date of the representations and
warranties made by First Banks in the Agreement:
(ii) the compliance by First Banks with all of its obligations under
the Agreement;
(iii) the absence of any litigation or administrative proceeding in
which an unfavorable judgment would prevent, prohibit or inhibit the Stock
Purchase;
(iv) the absence of an Adverse Regulatory Action;
(v) the receipt of all necessary regulatory approvals in order to
permit the Stock Purchase to be consummated, including the approvals of
BTX's stockholders and of the Federal Reserve Board and the Texas
Department of Banking;
(vi) the receipt by BTX of the purchase price for the Class B Stock
and of all documents required to be received from First Banks, in form and
substance reasonably satisfactory to BTX (these documents include a legal
opinion of counsel to First Banks with respect to specified matters); and
(vii) the receipt by BTX of the opinion of its investment banking
firm, McKenna & Company, which is discussed herein under the heading
"Opinion of Financial Advisor". The requisite opinion has been received by
BTX, and the full text of the opinion appears as Appendix B to this Proxy
Statement.
As of the date of mailing of this Proxy Statement, First Banks had filed
its applications for the requisite approvals of the Stock Purchase by the Board
of Governors of the Federal Reserve System (the "FRB") and the Texas Department
of Banking. Although neither of such approvals has been granted, BTX believes
that the prospects for such approval are favorable. There is a mandatory waiting
period of thirty (30) days following the receipt of approval of the FRB before
the Stock Purchase may be lawfully consummated.
Once the Stock Purchase has been completed, First Banks will have the
ability to elect a majority of members of the Board of Directors of BTX. Section
6.01 of the Agreement requires that, following the closing of the Stock
Purchase, three directors of BTX shall resign, and the remaining three directors
shall take action to fill three vacancies on the Board with three affiliates of
First Banks: James F. Dierberg, Allen H. Blake, and Mark T. Turkcan.
Accordingly, the proposal for election of directors contained elsewhere in this
Proxy Statement (see the discussion under the heading "PROPOSAL NO. 3: Election
of Directors") contemplates that three of the current BTX directors (Messrs.
Brown, Leszczynski and Stanzel) will resign their positions as directors of BTX
immediately after the closing of the Stock Purchase.
The proposed amendments to the BTX Certificate of Incorporation provide for
a change in the method of voting for the election of directors which, if
enacted, will become effective at the 1995 Annual Meeting of Stockholders. This
change would authorize cumulative voting by stockholders, which may increase the
possibility that BTX stockholders other than First Banks will be able to elect
one or more (but less than a majority) of the directors of BTX. This change is
discussed under the heading "PROPOSAL NO. 2: Amendments to BTX's Certificate of
Incorporation -- Cumulative Voting."
Either party may terminate the Agreement under certain specified
conditions, which principally relate to the breach of the Agreement by the other
party, the failure of the other party to satisfy a condition precedent to the
completion of the Stock Purchase, the denial of a required regulatory approval
and the lapse of any time period during which such denial may be appealed, or an
unfavorable vote on the transaction by BTX's stockholders. First Banks would
also have the right to terminate the Agreement in the event BTX or any of its
subsidiaries were to become subject to an enforcement action, regulatory
agreement or supervisory agreement imposed by a bank regulatory agency. Finally,
the Agreement provides that it may be terminated by the mutual consent of BTX
and First Banks or by either party acting unilaterally if the Stock Purchase has
not been consummated on or before February 28, 1995.
Because of the fact that First Banks will be incurring significant expenses
to proceed toward the consummation of the Stock Purchase and will necessarily
forego other possible transactions which may
11
<PAGE> 14
represent desirable investments, First Banks sought assurances that it would
receive a benefit in the event that the Stock Purchase is not consummated due to
the actions of a third party who consummates a competing transaction with BTX (a
merger or consolidation, a purchase from BTX of substantially all of its assets,
or a transaction in which such third party directly or indirectly acquires
beneficial ownership of 25% of BTX's outstanding voting stock). In that regard,
Section 9.02 of the Agreement would require that, if such an event occurs within
21 months following termination of the Agreement in a transaction announced
publicly within 9 months after such termination, BTX will be liable to pay First
Banks the sum of $1,500,000 as a "break up" or termination fee. The amount of
this fee and the circumstances under which it would become payable were resolved
after lengthy negotiations in which BTX sought to provide to First Banks a
reasonable incentive to enter into the Agreement while limiting the impact on
BTX in the event that it is ultimately required to make such a payment.
BTX'S REASONS FOR THE STOCK PURCHASE
BancTEXAS' Board of Directors believes that the investment by First Banks
will:
(i) establish and maintain an appropriate level of capital allowing
room for anticipated growth;
(ii) allow BTX to utilize certain of the products and services of
First Banks to increase revenues, reduce costs and increase earnings per
share;
(iii) enable BTX to pursue potential future cash acquisitions (which
it has not had the resources to do in the past) as well as to compete more
effectively in the market for stock-for-stock acquisitions and to offer
combined cash and stock acquisition proposals where appropriate; and
(iv) provide the opportunity for BTX to increase the level of its
banking activities necessary to cover its overhead including the costs of
being a publicly traded company.
BTX's Board of Directors believes that the increased financial,
operational, competitive and capital strength of BTX after the investment,
combined with the new product offerings and potential cost reductions brought by
First Banks, has the potential to increase earnings, return on assets and return
on equity and to enable BTX to take advantage of future acquisition
opportunities that would not otherwise be available.
The Board of Directors has received an opinion from McKenna & Company, the
investment banking firm engaged by BTX, stating that the terms of the Stock
Purchase, when taken as a whole, are fair, from a financial point of view, to
the holders of BTX Common Stock. Pursuant to its engagement letter with McKenna
& Company, BTX has paid McKenna & Company a fee of $200,000, has agreed to pay
it a fee of $100,000 at the closing of the Stock Purchase, and has agreed to
reimburse it for its reasonable out-of-pocket expense incurred in connection
with the rendering of its opinion and to indemnify it against certain
liabilities and expenses in connection with its services as financial advisor to
BTX, including certain liabilities under securities laws. See "Opinion of
Financial Advisor."
OPINION OF FINANCIAL ADVISOR
McKenna & Company is a regional investment banking firm with experience in
private equity transactions similar to the Stock Purchase and is familiar with
BTX, its business, its management and its relationship with various bank
regulators. As part of its investment banking business, McKenna & Company is
engaged in the valuation of businesses and their securities in connection with
mergers, acquisitions, private placements and valuations for distribution of
such securities.
McKenna & Company delivered its written opinion to the Board of Directors
on July 11, 1994 stating that, as of such date, the terms of the Stock Purchase,
when taken as a whole, are fair to the holders of BTX Common Stock from a
financial point of view. A copy of McKenna & Company's opinion is attached as
Appendix II hereto and should be read in its entirety by holders of Regular
Common Stock. No limitations were imposed on McKenna & Company by the Board of
Directors or management of BTX with respect to the investigation made or
procedures used by McKenna & Company in preparing or rendering its opinion, and
BTX, First Banks and their respective managements cooperated fully with McKenna
& Company in connection therewith. In rendering its opinion, McKenna & Company
relied, without independent verification,
12
<PAGE> 15
upon the accuracy and completeness of the financial and other information
publicly available or furnished by BTX and First Banks for the purposes of such
opinion. McKenna & Company did not make or obtain any independent appraisal or
valuation of any assets or liabilities of either BTX or First Banks. McKenna &
Company was not asked to consider, and its opinion does not address, the
relative merits of the Stock Purchase as compared to any alternative business
strategies that might exist for BTX or the effect of any other business
combinations in which BTX might engage. McKenna & Company was not requested to
seek, and has not sought, offers which are competitive with the terms of the
Stock Purchase; however, McKenna & Company did participate on behalf of BTX in a
number of negotiations with potential acquisition partners and equity investors
over the past two years, which culminated in the present proposed Stock
Purchase.
The Board of Directors of BTX originally engaged McKenna & Company in July
1991 to assist BTX in its efforts to raise additional capital and to make
acquisitions. Such engagement agreement was extended by mutual agreement through
the most recent such extension dated February 28, 1994. Such engagement entitled
McKenna & Company to a fee equal to $100,000 plus 2% of the value of all
consideration received in an acquisition, merger or sale of BTX or 5% of the
value of securities sold in a capital raising transaction including a
transaction such as the Stock Purchase. In March 1994, BTX and McKenna & Company
decided that it would be inappropriate for McKenna & Company to charge a 5% fee
with respect to the Stock Purchase and, because BTX required assistance in
negotiating the terms of the Stock Purchase and its Board of Directors required
a fairness opinion with respect to the terms of the Stock Purchase, McKenna &
Company and BTX negotiated a fee of $300,000 for the services of McKenna &
Company, including the preparation and delivery of a fairness opinion.
During the negotiations with First Banks, which were conducted principally
by Mr. Collins on behalf of BTX and Mr. Dierberg on behalf of First Banks, Mr.
McKenna served as an advisor to Mr. Collins regarding various financial issues
which were discussed. He also provided BTX and First Banks and their
representatives with information during the negotiations regarding such issues,
primarily relating to the factors considered in determining the purchase price
to be paid by First Banks, the formula for determination of the price at which
First Banks is to have the right to purchase shares of BTX stock in the future,
the amount of the "break-up" fee and the circumstances under which it could
become payable.
In rendering its opinion, McKenna & Company reviewed (i) certain publicly
available business and financial information relating to BTX and First Banks as
well as pro forma and financial forecasts and other data for BTX that were
provided by BTX; (ii) the terms of the Stock Purchase as set forth in the
Agreement in relation to, among other things, current and historical market
prices and trading values of BTX; BTX's earnings, book value, return on assets,
return on equity and equity to assets ratio; the historical and projected growth
rates of BTX, and the capitalization and financial condition of BTX and First
Banks; (iii) the financial terms of certain other recent transactions involving
other parties, which McKenna & Company considered comparable to the Stock
Purchase; (iv) certain financial, stock market, and other publicly available
information relating to the business of other companies whose operations McKenna
& Company considered comparable to BTX; (v) reductions and revenue enhancements
available to BTX from its affiliation with First Banks after the Stock Purchase;
(vi) the results of and responses received in numerous attempts since January
1993 to raise equity for BTX or to arrange stock-for-stock mergers or
acquisitions; (vii) and such other financial, economic, and market criteria as
McKenna & Company deemed necessary in arriving at its opinion. McKenna & Company
also met with certain senior officers and other representatives of BTX and First
Banks to discuss the business, operations, and prospects of BTX and First Banks
after the Stock Purchase is made.
The following is a summary of the analyses which McKenna & Company
presented to the BTX Board of Directors on March 17, April 21, and May 19, 1994
and in written material supplied with the opinion and includes a discussion of
the material factors which formed the basis for the written opinion delivered on
July 11, 1994.
Previous Capital Raising and Merger and Acquisition Activities. Over the
course of the past 18 months (since the BTX acquisition of First Banks/Las
Colinas on December 31, 1992), BTX has pursued an active program to acquire
capital through equity raising and merger and acquisition activities ("Equity
Transac-
13
<PAGE> 16
tions") and to better utilize its net operating losses (NOLs). McKenna &
Company, acting as a representative of BTX, and BTX acting independently, have
approached or have been approached by approximately 28 parties since January
1993 with respect to such possible Equity Transactions. In approximately 20 of
such contacts there was no substantive result of the approach. BTX and McKenna &
Company concluded that such lack of interest in discussing an Equity Transaction
was due in part to the approached party's lack of interest in accepting BTX
Common Stock at the then current market prices.
In eight of the approximately 28 approaches there was a level of interest
which led BTX to pursue additional discussions and varying levels of negotiation
with the other party, as follows:
January 1993 -- BTX entered into confidentiality agreements and
made an offer to acquire for stock a profitable,
overcapitalized bank in Dallas with approximately
$60 million in total assets. The offer, which was
priced at approximately 1.9 times book value (at a
time when BTX stock was trading at approximately
$2.00 per share) was turned down by the Dallas bank
for, among other reasons, the value it placed on
BTX stock which was trading in excess of 3.0 times
fully diluted book value. It was believed by
BancTEXAS that in evaluating the offer the target
bank placed a value on BTX's stock of approximately
book value.
February 1993 -- BTX and McKenna & Company negotiated with an
investor group to invest approximately $5,000,000
in BTX in the form of a part stock, part debenture
offering which might be combined with a rights
offering to stockholders. This negotiation failed
when BTX could not convince the investors of BTX's
financial capacity to service the projected
subordinated debt or to pay preferred dividends.
July 1993 -- BTX entered into confidentiality agreements, met
with and conducted mutual due diligence sessions
with respect to a potential merger of equals with a
privately held Houston bank holding company with
assets of approximately $175 million. In these
discussions, representatives of BTX's Board of
Directors met with and discussed the merger with
representatives of the Board of Directors of the
Houston bank. The proposed merger terms were
ultimately unacceptable to BTX because the Houston
bank offered to exchange its stock at a premium to
its book value while it anticipated making negative
adjustments to the BTX book value prior to the
exchange of stock, such that the exchange ratio
would be dilutive to BTX stockholders and would
give the Houston bank a controlling interest both
in the number of fully diluted shares and in the
number of seats on the resulting Board of
Directors.
August 1993 -- BTX entered into confidentiality agreements and
conducted mutual due diligence sessions with
respect to the acquisition of a Houston bank with
assets of approximately $75 million.
Representatives of BTX met with the Executive
Committee of the Houston bank and submitted an
indication of interest in acquiring the bank at
approximately 1.75 times book value for the bank,
payable in BTX common stock. This offer was
ultimately found to be unacceptable to the target
bank's Board of Directors, who counter-offered that
the owners would accept BTX stock valued at the
lower of market price or 2.07 times fully diluted
book value (then equal to $1.28 per share), with
the valuation of their bank at 2.07 times book
value. During the negotiation, the Houston bank
accepted a competing offer for a price of
approximately 2.12 times book value and did not ask
that other bank to arbitrarily mark down the price
of its common stock exchanged in the
stock-for-stock acquisition.
14
<PAGE> 17
Late 1993 through
January 1994 -- BTX entered into discussions with a Texas bank with
assets in excess of $100 million with respect to a
proposed transaction wherein BTX and the other bank
would be merged and an investor group would invest
approximately $10 million to purchase common stock
sufficient to meet regulatory capital requirements
for the combined banks. The Texas bank had marginal
capital and had a relatively large non-performing
loan portfolio. It was originally anticipated by
the investor group that they would invest money in
the Texas bank for a controlling interest in the
bank at a price that was at or below book value and
would then merge the newly capitalized bank into
BTX at approximately 2.0 times book value. After
considerable discussion and negotiations, including
review by the BTX Board of Directors, it was
determined that such a transaction would be
dilutive to BTX stockholders and not fair because
it would permit a short term capital gain of
approximately $10 million to benefit the investor
group. In January 1994 BTX made a proposal to this
bank to combine both banks and, after the merger,
to sell the investor group BTX common stock at
approximately $1.00 per share. Ultimately, however,
without formal rejection of the proposed terms, the
investor group did not make its investment in the
other bank and BTX did not believe it was prudent
to continue discussions of a merger without proof
that the investment would ever occur. In January
1994 the discussions were formally terminated.
December 1993 through
February 1994 -- Representatives of BTX negotiated a confidentiality
agreement, conducted due diligence, met with the
Board of Directors of and made an offer to acquire
a Texas based non-bank financial institution in a
stock-for-stock transaction. In this transaction
BTX offered to issue approximately 3,700,000 of its
shares to acquire the financial institution at
approximately 1.8 times the $3,100,000 net book
value of the institution (or approximately
$5,600,000). After considerable analysis by its
Board of Directors and its investment banker, the
other financial institution counter-offered,
proposing a transaction in which it would receive
11,242,000 BTX shares (with a market value of
approximately $16,900,000). The BTX Board rejected
the counter-offer as significantly dilutive to its
stockholders and in excess of the fair
consideration for the assets that would have been
acquired.
February 1994 -- BTX met with management, negotiated a
confidentiality agreement and analyzed due
diligence information with respect to the
acquisition of a profitable $230 million
multi-branch Houston bank that was seeking an
acquirer in a negotiated auction. BTX indicated its
desire to make a proposal at a significant premium
to book value (at or slightly in excess of 2.0
times book value) in a stock-for-stock transaction.
The target bank subsequently accepted a cash offer
from another bank holding company at approximately
1.6 times book value.
15
<PAGE> 18
March 1994 -- BTX supplied financial statements to a large Texas
based subsidiary of one of the largest bank holding
companies in the United States with respect to a
possible all cash acquisition of BTX. After
analysis of such information, the potential
acquirer indicated that because of BTX's earnings
record and book value per share, it could not
proceed to make an offer to acquire BTX at or close
to its then current stock market price of
approximately $1.50 per share.
As a result of the responses of other financial institutions regarding
these potential Equity Transactions, BTX and McKenna & Company concluded that
BTX has only limited prospects of successfully concluding transactions of the
sort contemplated over this 18 month period. The reasons for not closing these
previous attempts have been numerous; however, the general theme in each
possible Equity Transaction has been the unwillingness of other parties to
accept BTX stock, or pay BTX stockholders a price that is reasonable in light of
the average market value of BTX common stock during this period of approximately
$1.50 per share, which is approximately 2.0 times book value per primary share
and approximately 2.4 times book value per fully diluted share.
Analysis of Potential Rights Offering. McKenna & Company analyzed the costs
and potential benefits of a rights offering of Class B Stock to BTX stockholders
simultaneously with the Stock Purchase. The Agreement provides that First Banks
has the right to maintain a minimum 55% ownership. Therefore the amount of a
potential rights offering to BTX stockholders would be only up to approximately
5.7 million shares or approximately $4.6 million if priced at $.80 per share. In
the opinion of McKenna & Company, the terms of the Class B Stock, including
non-transferability, the absence of liquidity and reduced dividends for the
first five years, made a potential investment in shares of the Class B Stock
generally unsuitable for individual stockholders. In any event, First Banks'
requirement that it maintain an ownership position of at least 55% of all BTX
voting stock also indicated that a rights offering would not be feasible. For
these reasons, McKenna & Company advised that the anticipated low acceptance
rate of a rights offering would generally make it uneconomic to offer such a
proposal to BTX's stockholders. In view of the advice received from McKenna &
Company and its assessment that a rights offering would add costs and delays to
the transaction without necessarily producing a commensurate benefit to BTX, the
BTX Board of Directors decided not to pursue a rights offering in connection
with the Stock Purchase.
Comparable Break-up Fee Analysis. McKenna & Company analyzed 14 recent cash
acquisition transactions involving banks of similar size in the Texas market.
The total consideration in such transactions ranged from $7,800,000 to
$187,000,000. In three such transactions where break-up fees were negotiated,
the break-up fee ranged from $1,000,000 (3.64% of total consideration) to
$6,000,000 (7.41% of total consideration) with an average of $3,333,333 (5.18%
of total consideration) versus the $1,500,000 (5.00% of total consideration) as
proposed in connection with the Stock Purchase.
Comparable Transaction Analysis with Respect to Price Per Share. Terms of
the Stock Purchase generally are not similar to other recent transactions where
control of a bank has been acquired by a purchaser. McKenna & Company reviewed
one other preferred stock and one debenture offering and 15 all cash bank
acquisitions in Texas from February 1992 to the present for banks with total
assets under $900,000,000 (the "Peer Group"). The total consideration for such
transactions ranged from $590,000 to $58,000,000.
McKenna & Company calculated, among other variables, multiples of the price
per share of the Stock Purchase and the transaction value for each of the
comparable Peer Group transactions with respect to each company's respective net
income, book value, total assets, return on assets ("ROA"), return on equity
("ROE") and equity to assets ratio. These transaction values were compared with
those that would result from the Stock Purchase at $.80 per share, generating an
implied price to book value for the Stock Purchase on a per share basis. Such
valuation was found on an overall basis to be substantially above the range of
the multiples for the Peer Group and therefore beneficial to stockholders of
BTX. This analysis produced an implied valuation of the premium to book value
per share based generally on the respective ROA, ROE of the Peer Group
transactions as follows:
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<PAGE> 19
(A) For the Peer Group, the ROA as compared to the valuation of BTX based
on the price to book value of the Stock Purchase was as follows:
<TABLE>
<CAPTION>
PEER GROUP BANK ROA PRICE TO BOOK VALUE
-------------------------------------- ----- -------------------
<S> <C> <C>
High.................................. 2.57% 1.60
Low................................... .08% .74
Mean.................................. 1.21% 1.15
Median................................ 1.15% 1.07
BTX(a)................................ .07% 1.08(a)
BTX(b)................................ .07% 1.29(b)
</TABLE>
(B) For the Peer Group, the ROE as compared to the valuation of BTX based
on the price to book value of the Stock Purchase was as follows:
<TABLE>
<S> <C> <C>
High................................. 34.14% 1.60
Low.................................. .88% .74
Mean................................. 13.99% 1.15
Median............................... 12.89% 1.07
BTX(a)............................... 1.49% 1.08(a)
BTX(b)............................... 1.49% 1.29(b)
</TABLE>
- ---------------
(a) Price to book value using $.80 per share based on primary shares
outstanding.
(b) Price to book value using $.80 per share based on fully diluted shares.
The results of these analyses show that for BTX, with earnings of $.01 per
share for the year ended December 31, 1993, ROA of .07% and ROE of 1.49%, the
price per share of $.80 paid by First Banks for the Stock Purchase is priced at
1.08 times book value per primary share and 1.29 times book value per fully
diluted share, which is a significant premium to other comparable transactions
in the Peer Group and is beneficial to BTX stockholders.
Reasonableness of the Price Per Share of the Antidilution Provision.
McKenna & Company analyzed the reasonableness of the premium of book value per
share available to First Banks in the proposed 7 1/2 year period during which
First Banks will have the right to purchase additional stock to maintain 55%
ownership of the voting stock of BTX, for consolidation of BTX by First Banks
for Federal Reserve Board regulatory accounting purposes. Such additional shares
can be purchased at 106.67% of tangible primary book value in years one to five,
113% of tangible primary book value in year six and 120% of tangible primary
book value thereafter in connection with future issuances of Regular Common
Stock or other voting securities by BTX.
In its analysis of premiums to book value in future years, McKenna &
Company estimated the premium that acquirers have recently paid in Peer Group
transactions when correlated against the ROA and ROE of the acquired bank.
McKenna & Company then correlated such premiums to book value to the ROA and ROE
of BTX pro forma after the effect of enhancements, to the actual ROA and ROE of
First Banks and to projected ROA and ROE of the top tier of banks in the Peer
Group. The result of this analysis shows that, based on recent Peer Group
premiums to book value at various ROA and ROE results, if such premiums are
similar in future years, then the premiums proposed in the antidilution
provision, when factored with the other terms of the Stock Purchase, are
reasonable.
Relationship of Current Market Value to the Price of the Stock Purchase.
McKenna & Company analyzed the $.80 per share price of the Stock Purchase to the
current stock price of $1.25 per share on the date that the Stock Purchase was
announced. Due to (i) BTX's low level of profitability and the significant
premium of the stock price to, among other things, BTX's book value and multiple
of its earnings per share, (ii) lack of success in a number of previous
potential transactions where potential acquirers of BTX stock concluded that the
then current market price of the BTX common stock was substantially higher than
the
17
<PAGE> 20
price at which such acquirers were willing to accept BTX stock, (iii) the
prevailing market for private equity of smaller publicly traded companies, (iv)
the terms of the Class B Stock which among other provisions included no
liquidity for five years, limited transferability, reduced dividend privileges,
pari passu treatment with the Regular Common Stock in liquidation or sale and
the assumption that First Banks would make additional cash investments in BTX to
maintain its ability to consolidate its investment for bank regulatory purposes,
McKenna & Company concluded that the approximate 38% discount to the market
price on the date of announcement of the Stock Purchase was reasonable.
No Peer Group company or transaction used in the above analysis is wholly
comparable to BTX or First Banks, or to the contemplated Stock Purchase.
Accordingly, an analysis of the results of the foregoing is not mathematical;
rather it involves complex considerations and judgments concerning differences
in operations and financial characteristics of the parties, the Stock Purchase,
acquisition comparables and other factors that could affect the public trading
and acquisition values of the companies in the Peer Group analysis.
The summary of McKenna & Company's analyses set forth above is a general
description of the material issues addressed in its presentation to the BTX
Directors on March 17, April 21 and May 19, 1994 and in additional written
material distributed to the Board of Directors with the delivery of its opinion.
The summary is not, however, a complete description of the analyses performed or
the matters considered by McKenna & Company in rendering its opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. McKenna &
Company believes that the analyses must be considered as a whole and that
selecting portions of the analyses, without considering all of the analyses,
would create an incomplete view of the processes underlying its opinion. In its
analyses, McKenna & Company made numerous assumptions with respect to industry
and company performance, general business and economic conditions, and other
matters, many of which are beyond the control of BTX. The analyses by McKenna &
Company are not necessarily indicative of actual values, which may be
significantly more or less favorable than those suggested by such analyses.
Additionally, analyses relating to the Stock Purchase do not purport to be
appraisals nor do they necessarily reflect the prices at which transactions in
BTX common stock have taken or will take place. Because such analysis and the
corresponding impact on BTX common stock price are inherently subject to
uncertainty, none of BTX or McKenna & Company management, the Board of Directors
of BTX or Partners of McKenna & Company, or any other person makes any
representation or offers any assurance regarding such matters.
OPERATIONS AFTER THE STOCK PURCHASE; POTENTIAL EFFECTS OF THE TRANSACTION
Immediately following the consummation of the Stock Purchase, it is
anticipated that the composition of the BTX Board of Directors will change, as
discussed elsewhere in this Proxy Statement, with Messrs. Dierberg, Blake and
Turkcan being appointed as directors. It is not anticipated that there will be
any significant changes in the management of BTX or BankTEXAS N.A., its
subsidiary bank.
It should be noted that the Stock Purchase will change the nature of BTX's
ownership structure from that of a widely-held company with no dominant or even
5% stockholder to one in which First Banks will have the power to exert control.
Consideration was given by management and the Board of Directors to whether this
change would adversely affect the interests of BTX's stockholders. In
particular, the Board recognized that the new structure would impede any
potential takeover of BTX by a third party (who would have no ability to acquire
control unless First Banks were to voluntarily agree to sell its position).
However, management and the Board of Directors concluded that, particularly
in light of BTX's experiences in seeking to identify potential investors and/or
acquisition partners (see the discussion of such efforts in the section above
under the heading "Opinion of Financial Advisor"), the Stock Purchase and the
potential positive effects thereof on BTX's long-term prospects represent a more
favorable step for existing stockholders than other feasible alternatives.
The following is a brief discussion of the material income tax effects of
the Stock Purchase. For federal income tax purposes, BTX currently has
approximately $65 million in NOLs which have accumulated in past
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<PAGE> 21
years and expire between 1994 and 2008 (with approximately $20 million expiring
in 1994). To the extent that BTX is able to generate net income that would
otherwise be taxable, the NOLs may generally be used to offset such taxable
income (subject to certain limitations and exceptions). However, the amount of
NOLs that may be used to offset income in any year is substantially restricted
to the extent that a corporation such as BTX undergoes an "ownership change" as
such term is defined in applicable federal income tax rules.
The Stock Purchase is likely to result in an ownership change for the
purposes of such rules, although the determination of whether or not such a
change will occur will depend upon various factors, particularly the market
value of the outstanding Regular Common Stock at the time that the Stock
Purchase occurs. The Board of Directors considered the possible impact on BTX if
an ownership change were deemed to occur as a result of the Stock Purchase and
determined that the potential benefits of the transaction outweigh any adverse
effects which might accrue if there is an ownership change. BTX's recent
earnings have not been sufficient to utilize a meaningful amount of expiring
NOLs, and, despite the efforts of management to improve BTX's performance, its
current prospects do not suggest that this situation will improve substantially
in the foreseeable future. While BTX has investigated various possible
transactions which would enable BTX to utilize a greater amount of the NOLs than
has occurred in the past, possibly in one or more transactions with outside
investors, the rules and limitations applicable to such transactions are
extremely complex, and there is considerable doubt that such transactions could
be successfully undertaken.
Furthermore, the Board of Directors considered that, even with an ownership
change, the annual limitation on the amount of NOLs that could be used in future
years to offset net income (the actual amount of which will not be determinable
until after the Stock Purchase has been completed, determined through a
calculation based on the deemed fair market value of BTX for this purpose and a
benchmark long-term rate for tax-exempt securities) should permit BTX to obtain
some ongoing benefit from the NOLs. In that regard, BTX believes that the
capital infusion to be realized from the Stock Purchase should have a positive
effect on BTX's earnings, for reasons discussed elsewhere in this Proxy
Statement, and thereby enhance the long-term prospects of utilizing a meaningful
portion of the NOLs.
RECOMMENDATION OF THE BTX BOARD OF DIRECTORS
Under rules of the New York Stock Exchange, approval of BTX's stockholders
is required for any transaction or series of transactions in which 20% or more
of the voting stock of BTX is to be issued. The favorable vote of the holders of
a majority of the shares of Common Stock represented at the Annual Meeting, in
person or by proxy, is necessary in order to approve the Stock Purchase.
Although Proposal No. 1 and Proposal No. 2 are presented as separate
proposals, they are closely related. The resolutions to be presented at the
Annual Meeting will provide that both proposals must be approved or else neither
will go into effect. If Proposal No. 1 is not enacted at the Annual Meeting,
then Proposal No. 2 would not be presented for a vote, and no amendments to
BTX's Restated Certificate of Incorporation would be enacted.
The Board of Directors of BTX unanimously recommends that the stockholders
vote FOR Proposal No. 1, approval of the Stock Purchase.
PROPOSAL NO. 2: AMENDMENTS TO BTX'S CERTIFICATE OF INCORPORATION
Proposal No. 2 embodies several amendments to the BTX Restated Certificate
of Incorporation (the "Certificate of Incorporation") which are required by the
Agreement (collectively, the "Amendments"). Appendix III included with this
Proxy Statement sets forth the text of the Proposed Certificate of Incorporation
incorporating the proposed amendments. This discussion is qualified in its
entirety by the text of the Proposed Certificate of Incorporation, which is
incorporated herein by reference.
Authorization of Class B Stock. Article Fourth of the Proposed Certificate
of Incorporation would authorize the issuance of up to 60,000,000 shares of
Class B Stock, of which 37,500,000 shares are to be issued to First Banks in the
Stock Purchase. The remaining 22,500,000 shares would be available for issuance
in any future transaction authorized by the Board of Directors, although it is
not presently contemplated that such
19
<PAGE> 22
additional shares would be used except for future issuances of Class B Stock if
and when First Banks exercises its rights to purchase additional shares in
connection with a future issuance of shares of Regular Common Stock by BTX
pursuant to Section 6.02 of the Agreement, as discussed above under "Proposal
No. 1 -- Approval of the Stock Purchase -- Terms of the Agreement." Article
Fourth also sets forth the powers, rights and preferences of the Class B Stock
with regard to voting, dividends, conversion into shares of Regular Common Stock
and other related matters, the material terms of which are described elsewhere
in this Proxy Statement.
In addition, Article Seventh of the Proposed Certificate of Incorporation
would provide that BTX's Bylaws may not be amended without the approval of First
Banks.
Authorization of Additional Shares of Regular Common Stock. Article Fourth
would also be amended to increase from 50,000,000 to 100,000,000 the number of
shares of Regular Common Stock which are available for issuance. As of June 30,
1994, 20,047,025 shares of Regular Common Stock were issued and outstanding, and
4,879,070 shares were reserved for issuance upon the exercise of presently
outstanding options, warrants and debentures.
The terms of the Class B Stock will require that BTX immediately reserve
for issuance 37,500,000 shares of Regular Common Stock which will become
issuable upon conversion of the same number of shares of Class B Stock by First
Banks once the Class B Stock becomes convertible, and it is necessary for
holders of Regular Common Stock to authorize additional shares of Regular Common
Stock in order to do so. In addition, the proposed amendment is intended to
establish a substantial number of authorized shares to enable the Board of
Directors, without the necessity of seeking further approval by stockholders, to
issue additional shares of Regular Common Stock if attractive opportunities to
do so arise (such as potential acquisitions of desirable target banks for stock
or for a combination of cash and stock).
Finally, it is appropriate to authorize additional shares of Regular Common
Stock to allow for the fact that First Banks may acquire additional shares of
Class B Stock in the future, and it will be necessary to have authorized but
unissued shares of Regular Common Stock available to be reserved for issuance
upon conversion of such Class B Stock.
There is no specific pending or proposed transaction, except for the Stock
Purchase, which is under consideration by BTX which would involve issuance of
the additional shares of Regular Common Stock proposed to be authorized.
Cumulative Voting. Article Fourth (B) 2(b) of the Proposed Certificate of
Incorporation provides for cumulative voting by the holders of shares of Regular
Common Stock and of Class B Stock. This means that, in any election of directors
after the adoption of this amendment, each holder would have the right to cast
as many votes as equals the product of the number of directors to be elected
times the number of shares held by such stockholder, and to cast all of such
votes for one candidate or divide the votes among candidates in any amounts
chosen by that stockholder. For example, if in a particular election there were
to be six directors elected and a stockholder were to own 100 shares of Regular
Common Stock, then he or she could cast a total of 600 votes; all 600 votes
could be cast for one nominee, or the 600 votes could be distributed among the
nominees for the six seats on the Board in any combination chosen by the
stockholder.
The general effect of the adoption of cumulative voting with respect to a
company such as BTX, which after the Stock Purchase will be subject to First
Banks' control, is to increase somewhat the possibility that stockholders whose
holdings amount to less than a majority of the outstanding voting stock may
elect one or more (but less than a majority) of the directors.
In the absence of cumulative voting, First Banks, as owner of a majority of
all outstanding voting shares of BTX (i.e., Regular Common Stock plus Class B
Stock) would have the power to elect all of the members of the Board of
Directors (irrespective of the number of directors to be elected at any given
meeting). However, in a contested election in which cumulative voting were
permitted and a sufficient number of minority stockholders chose to allocate
their votes in a coordinated manner, such minority stockholders could elect one
or more directors even if such election were opposed by First Banks.
20
<PAGE> 23
The actual results in any election contest would depend upon several
factors, including the number of stockholders who would choose to take advantage
of cumulative voting and the number of directors to be elected (in an election
governed by cumulative voting, the relative number of votes needed to elect at
least one director declines as the total number of directors to be elected
increases). It should also be noted that cumulative voting would never affect
the outcome of an election unless there were more nominees for the position of
director than the number of positions to be filled.
The favorable vote of the holders of a majority of the outstanding stock
entitled to vote is necessary in order to approve the Amendments.
The Board of Directors of BTX unanimously recommends that the stockholders
vote FOR Proposal No. 2, the adoption of the Amendments.
PROPOSAL NO. 3: ELECTION OF DIRECTORS
The Board of Directors recommends that the stockholders vote to re-elect
Messrs. Brown, Collins, Crocco, Leszczynski, Stanzel and Story as directors for
a one year term. If Proposals No. 1 and 2 are approved by BTX's stockholders,
simultaneously with the consummation of the Stock Purchase authorized by
Proposal No. 1, Messrs. Brown, Leszczynski and Stanzel have indicated that they
intend to resign as directors, and the remaining directors have indicated that
they will elect James F. Dierberg, Allen H. Blake and Mark T. Turkcan to fill
the vacancies caused by such resignations. It is anticipated that Messrs.
Dierberg, Blake and Turkcan will then serve as directors of BTX until the 1995
Annual Meeting of Stockholders.
NOMINEES
The Board of Directors currently consists of six members. Six directors are
to be elected at the Annual Meeting. Each of the nominees is presently a
director of BTX.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST
DIRECTOR OF FIVE YEARS AND DIRECTORSHIPS
NAME AGE BTX SINCE OF PUBLIC COMPANIES
- ------------------------------ --- ----------- -------------------------------------------
<S> <C> <C> <C>
Richard L. Brown(1)(2)(3) 55 1987 President and Chief Executive Officer of
Houston General Insurance Group Inc.,
Fort Worth, Texas since 1986.
Nathan C. Collins(1)(4) 59 1987 Chairman of the Board, President and Chief
Executive Officer of BTX since November 1,
1987; prior thereto, Mr. Collins served as
an executive officer of Valley National
Bank of Arizona for more than ten years.
Charles A. Crocco, Jr. 55 1988 Partner in the law firm of Lunney, Crocco,
De Maio & Camardella, P.C., New York City
since 1968; director of The Hallwood Group
Incorporated (merchant banking) since
January 1981; director of Showbiz Pizza
Time, Inc. since January 1988.
Joseph J. Leszczynski(1)(2) 62 1987 Chairman of the Board of T.E.L. Associates,
Inc., a management consulting firm; from
April 1986 until December 1990 Chairman of
the Board and Chief Executive Officer of
Optic-Electronics Corporation (night vision
devices).
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST
DIRECTOR OF FIVE YEARS AND DIRECTORSHIPS
NAME AGE BTX SINCE OF PUBLIC COMPANIES
- ------------------------------ --- ----------- -------------------------------------------
<S> <C> <C> <C>
Thomas A. Stanzel(3) 64 1987 Private investor, Dallas, Texas since 1982.
Edward T. Story, Jr.(2)(4) 50 1987 President and Chief Executive Officer of
SOCO International, Inc., a majority-owned
subsidiary of Snyder Oil Corporation,
engaged in international oil and gas
operations, since August 1991; from August
1990 until August 1991, Chairman of Thaitex
Petroleum Company (oil and gas exploration
and production); from August 1981 to August
1990 Vice Chairman and Chief Financial
Officer of Conquest Exploration Company
(oil and gas exploration and production);
director of Hi-Lo Automotive, Inc., an auto
parts company, since 1987.
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Personnel Committee.
(4) Member of the Nominating Committee.
Although BTX does not anticipate that any of the above-named nominees will
refuse or be unable to accept or serve as a director of BTX, the persons named
in the enclosed form of proxy intend, if any nominee becomes unavailable, to
vote the shares represented by the proxy for the election of such other person
or persons as may be nominated or designated by management, unless they are
directed by proxy to do otherwise.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the shares of common stock represented at the Annual Meeting is
required for the election of directors.
Although Messrs. Dierberg, Blake and Turkcan are not nominees for director,
certain biographical information regarding each of them is presented in the
table below in light of the fact that, if Proposals No. 1 and 2 are approved,
they will be appointed to the Board of Directors of BTX shortly after the Annual
Meeting. None of such persons is a director of any publicly-held company other
than First Banks.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
NAME AGE AND POSITIONS HELD WITH FIRST BANKS, INC.
- ------------------------------ --- ------------------------------------------------------
<S> <C> <C>
James F. Dierberg 56 Chairman of the Board and Chief Executive Officer of
First Banks since 1988; director of First Banks since
1979; President of First Banks, 1979-1992 and May
1994-present. Various positions as officer and/or
director of corporations owned by Mr. Dierberg and/or
family members since 1957.
Allen H. Blake 51 Senior Vice President of First Banks since 1992;
Secretary and Director of First Banks since 1988;
joined First Banks as Vice President and Chief
Financial Officer in 1984.
Mark T. Turkcan 38 Senior Vice President, Retail Banking of First Banks,
1994; Vice President, Mortgage Banking of First Banks
since 1990; joined First Banks when Clayton Savings
and Loan Association, St. Louis, Missouri (now First
Bank A Savings Bank) for whom Mr. Turkcan was employed
in various capacities since 1985, was acquired by
First Banks in 1990.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
22
<PAGE> 25
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, a
Personnel Committee and a Nominating Committee, the members of which are listed
above under "Election of Directors -- Nominees." Set forth below is a
description of the functions of those committees.
Executive Committee. The Executive Committee exercises all the power and
authority of the Board of Directors in the management of the business and
affairs of BTX in the interim between meetings of the Board of Directors.
Audit Committee. The duties of the Audit Committee include the making of
recommendations to the Board of Directors for engaging and discharging BTX's
independent auditors; reviewing and approving the engagement of the independent
auditors for audit and nonaudit services and considering the independence of the
auditors prior to engaging them; reviewing with the independent auditors the
fee, scope and timing of the audit and nonaudit services; reviewing the
completed audit with the independent auditors regarding the conduct of the
audit, accounting adjustments, recommendations for improving internal controls
and any other significant findings during the audit; meeting periodically with
management and BTX's internal auditor to discuss internal auditing, accounting
and financial controls; reviewing internal accounting and auditing procedures
with BTX's financial staff; and initiating and supervising any special
investigations it deems necessary.
Personnel Committee. The Personnel Committee reviews the compensation of
the executive officers, administers the severance plans, administers and
interprets the BancTEXAS Group Inc. 1990 Stock Option Plan and is authorized to
grant stock options and to take other actions under such plans.
This committee also reviews the compensation and benefits for the senior
managers of BTX on an individual basis and reviews and sets guidelines for
salary administration and various benefit programs for all employees. It also
advises and assists management in formulating and implementing policies designed
to assure the selection, development and retention of key personnel. On behalf
of the Board of Directors of BTX, this committee reviews the performance and
administration of the Pension Plan and the adequacy of its funding and the
performance and administration of the 401-K Plan.
Nominating Committee. The Nominating Committee periodically reviews the
size and composition of the Board of Directors and is responsible for
recommending nominees to serve on the Board of Directors. Nominees will be
selected on the basis of recognized achievements and their ability to bring
various skills and experience to the deliberations of the Board. In carrying out
its responsibilities, it is expected that the Nominating Committee will consider
candidates recommended by other directors, officers and stockholders. Written
suggestions for candidates, accompanied by a written consent of the proposed
candidate to serve as a director if nominated and elected, a description of his
or her qualifications and other relevant biographical information must be sent
to the Secretary of BTX at its principal executive offices and received by BTX
on or before December 31, 1994, to be considered for next year's Annual Meeting
of Stockholders.
Board and Committee Meetings. The Board of Directors held 12 meetings in
1993, including regular and special meetings. During 1993, there were four
meetings of the Audit Committee, no meetings of the Executive Committee, two
meetings of the Personnel Committee and one meeting of the Nominating Committee.
During 1993, all directors of the Company attended more than 90% of the
aggregate of the number of meetings of the Board of Directors and the meetings
held by all committees of the Board of Directors on which they served.
DIRECTOR COMPENSATION
During 1993, each director of BTX (excluding Mr. Collins who was not paid
for his services as a director) was paid $5,000 as an annual retainer and was
paid $750 for each meeting of the Board of Directors attended. In addition, the
chairman of each committee was paid an annual retainer of $2,000 and each member
of a committee was paid $500 for each committee meeting attended. Also,
directors traveling more than 75 miles to attend a meeting were reimbursed for
their actual travel expenses. On September 5, 1990 the Company entered into a
consulting agreement with Edward T. Story, Jr., whereby he is, when requested by
23
<PAGE> 26
the Chairman of the Board, obligated to assist with certain capital formation
projects. Pursuant to this agreement Mr. Story was paid $1,000 in 1992 and zero
in 1993.
During 1993 each director of BTX also served as director of BANKTEXAS N.A.,
the company's wholly-owned banking subsidiary (the "Bank"). With the exception
of Mr. Collins, who was not paid for his services as a director, each director
received an annual retainer of $2,500 from the Bank and was paid $250 for each
Board meeting attended. Since all of the meetings of the Bank's Board were held
on the same day as those for the BTX Board none of the directors was reimbursed
any additional sums for travel.
EXECUTIVE MANAGEMENT
The executive management of BTX as of June 30, 1994 was as follows:
NATHAN C. COLLINS, 59, was elected Chairman of the Board, President and
Chief Executive Officer of the BTX effective November 1, 1987. Since November
1987, Mr. Collins has served as Chairman of the Board of BankTEXAS N.A. and its
predecessors. In April 1992 he was elected President and Chief Executive Officer
of the Bank. From 1986 to October 1987, Mr. Collins was Executive Vice
President, Manager of the Asset/Liability Management Group and Senior Credit
Officer of Valley National Bank of Arizona. Prior to that time, he served for
more than ten years in various positions as an executive officer of Valley
National Bank of Arizona.
RICHARD H. BRAUCHER, 58, was elected Senior Vice President of BTX in July
1981. Prior to that time, Mr. Braucher served as a Vice President of BTX in
addition to his present role as both General Counsel to and Secretary of BTX and
the Bank. Mr. Braucher has been with BTX since 1979.
D. KERT MOORE, 46, joined BTX in January 1983. Mr. Moore served as Senior
Vice President, Controller and Cashier of BancTEXAS Dallas from October 1985
until January 1990. Mr. Moore was elected Controller, Treasurer and Chief
Accounting Officer of BTX in February 1990. He was elected Chief Financial
Officer of BTX in April 1992. He has also served as Senior Vice President and
Controller of the Bank since 1990 and was elected Chief Financial Officer and
Cashier of the Bank in April 1992.
FAMILY RELATIONSHIPS
There is no family relationship between any of the nominees, directors and
any executive officer of BTX or its subsidiaries.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BankTEXAS N.A. has had since January 1, 1993, and it expects to have in the
future, loan transactions in the ordinary course of business with directors of
BTX and their respective affiliates. These loan transactions have been and will
be on the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unaffiliated persons and
did not involve more than the normal risk of collectibility or present other
unfavorable features. At December 31, 1993, such loans totalled $46,000 and
represented 0.31% of stockholders' equity. None of the indebtedness has been
classified in any manner by regulatory authorities or charged-off by the Bank.
The Bank does not extend credit to officers of BTX or of the Banking Subsidiary
except extensions of credit secured by mortgages on personal residences, loans
to purchase automobiles and personal credit card accounts.
Certain of the directors and officers of BTX and their respective
affiliates have deposit accounts with the Bank. It is the policy of BankTEXAS
N.A. not to permit any officers or directors of BTX or their affiliates to
overdraw their respective deposit accounts unless that person has been
previously approved for overdraft protection under a plan whereby a credit limit
has been established in accordance with the Bank's standard credit criteria.
During 1993 the Bank engaged in a series of repurchase transactions with
Edward T. Story, Jr., a director of BTX and of the Bank. These transactions are
short-term in nature and involve the deposit with the Bank of U.S. government
securities, subject to agreements to repurchase. The principal amounts of the
repurchase
24
<PAGE> 27
transactions have varied and the largest principal amount of any transaction in
1993 was $262,100. All of the transactions with Mr. Story have been at market
interest rates and, in the opinion of management, have been on terms as
favorable to the Bank as are available in transactions with unaffiliated
persons.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during the year ended December 31, 1993, and specified information with
respect to the two preceding years, by the chief executive officer and each of
the four other most highly compensated executive officers of BTX, as determined
based upon salary and bonus earned during 1993.
SUMMARY COMPENSATION TABLE FOR YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARD PAYOUTS
-------------------------------------- ------------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS LTIP COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) PAYOUTS ($)(2)
- ------------------------------- ---- ------- ------ ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nathan C. Collins, Chairman of 1993 250,000 -0- N/A none none none 899
the Board, President & Chief 1992 250,000 23,200 N/A none none none 1,000
Executive Officer of BTX 1991 250,000 25,000 N/A none none none N/A
David F. Weaver, Regional 1993 107,500 -0- N/A none none none 840
President -- South of 1992 107,500 10,750 N/A none none none 2,942
BankTEXAS N.A. 1991 107,500 10,750 N/A none none none N/A
Richard H. Braucher, Senior 1993 91,800 -0- N/A none none none 459
Vice President, Secretary & 1992 91,800 9,180 N/A none none none -0-
General Counsel of BTX 1991 91,800 9,180 N/A none none none N/A
Jerry V. Garrett, Senior Vice 1993 90,000 -0- N/A none none none 473
President -- Consumer Lending 1992 90,000 5,000 N/A none none none 900
of BankTEXAS N.A. 1991 90,000 5,000 N/A none none none N/A
John G. Sprengle, Senior Vice 1993 84,500 -0- N/A none none none 899
President & Chief Credit 1992 84,500 8,450 N/A none none none 1,743
Officer of BankTEXAS N.A. 1991 84,500 8,450 N/A none none none N/A
</TABLE>
- ---------------
(1) No response is required for years prior to 1992. For 1993 the total of all
other annual compensation for each of the named officers is less than the
amount required to be reported, which is the lesser of (a) $50,000 or (b)
ten percent (10%) of the total of the annual salary and bonus paid to that
person in 1993.
(2) No response is required for years prior to 1992. All items reported are
BTX's matching contributions to the 401(k) Plan for the year indicated
except that in 1992, the total for Mr. Weaver is comprised of $1,592 as
relocation assistance to cover mortgage rate differential and $1,350 as
BTX's contribution to the 401(k) Plan.
25
<PAGE> 28
OPTION EXERCISES DURING 1993 AND YEAR-END OPTION VALUES
The following table indicates the number of options, if any, exercised by
the named executive officers during the year ended December 31, 1993 and the
number and value of options held as of December 31, 1993. BTX does not have any
outstanding stock appreciation rights.
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED 12-31-93, AND FY-END OPTION VALUE
- -------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT FY-END (#) OPTIONS AT FY-END
-------------------- --------------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ----------------------------- --------------- -------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Nathan C. Collins, 100,000 $125,000 900,000 shares $1,237,500
Chairman of the Board, exercisable
President & Chief none -- unexercisable
Executive Officer of BTX
David F. Weaver, none none 75,000 shares $ 103,125
Regional President -- exercisable
South of BankTEXAS N.A. none -- unexercisable
Richard H. Braucher, 25,000 $ 50,000 50,000 shares $ 68,750
Senior Vice President, exercisable
Secretary & General none -- unexercisable
Counsel of BTX
Jerry V. Garrett, 30,000 $ 33,750 45,000 shares $ 61,875
Senior Vice President -- exercisable
Consumer Lending of none -- unexercisable
BankTEXAS N.A.
John G. Sprengle, 14,000 $ 35,000 61,000 shares $ 83,875
Senior Vice President & exercisable
Chief Credit Officer of none -- unexercisable
BankTEXAS N.A.
</TABLE>
- ---------------
(1) Value realized is before applicable taxes, based on the difference between
exercise prices and closing prices on the dates of exercise.
BTX has omitted from this Proxy Statement the tables intended to disclose
information regarding options granted during 1993 and Long Term Incentive Plan
awards. No options were granted in 1993 and BTX does not currently have any Long
Term Incentive Plan.
26
<PAGE> 29
STOCK PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
shareholder returns of BTX Regular Common Stock, the New York Stock Exchange
Market Value Index and the Media General Index of Banks located in the West
South Central Region, for the five year period from December 31, 1988 through
December 31, 1993. The Company's common stock and the securities of 27 other
banks primarily located in Texas, Louisiana, Oklahoma and Arkansas are included
in the Media General West South Central Banks index. The graph and the table
which follows are based on the assumption that the value of the investment in
BTX common stock and in each index was $100 at December 31, 1988 and that all
dividends were reinvested (BTX did not pay any dividends during such period).
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
MEDIA GEN-
MEASUREMENT PERIOD BANCTEXAS NYSE MARKET ERAL WEST
(FISCAL YEAR COVERED) GROUP INC. VALUE INDEX SOUTH CENTRAL BANKS
<S> <C> <C> <C>
12/31/88 100.00 100.00 100.00
12/31/89 41.67 127.57 123.53
12/31/90 31.25 122.36 74.09
12/31/91 54.17 158.35 124.91
12/31/92 233.33 165.80 213.56
12/31/93 183.33 188.25 250.52
</TABLE>
BTX EMPLOYEE BENEFIT PLANS
BTX maintains various employee benefit plans. Directors are not eligible to
participate in such plans (except the 1990 Stock Option Plan) unless they are
also employees of BTX or one of its subsidiaries.
Pension Plan. The BancTEXAS Group Inc. and Subsidiaries' Employees
Retirement Plan (the "Pension Plan") is a noncontributory, defined benefit plan
for all eligible officers and employees of BTX and its subsidiaries. Benefits
under the Pension Plan are based upon annual base salaries and years of service
and are payable only upon retirement or disability and, in some instances, at
death. An employee is eligible to participate in the Pension Plan after
completing one year of employment if he or she was hired before attaining
27
<PAGE> 30
age 60, is at least 21 years of age and worked 1,000 hours or more in the first
year of employment. A participant who has fulfilled the eligibility and tenure
requirements will receive, upon reaching the normal retirement age of 65,
monthly benefits based upon average monthly compensation during the five
consecutive calendar years out of his or her last ten calendar years that
provided the highest average compensation.
BTX utilizes the unit-credit cost method to compute its annual contribution
requirements under the Pension Plan. Under this method, past-service costs are
aggregated to determine the total past-service cost of the Pension Plan. The
excess of the total past-service cost over the assets of the Pension Plan equals
BTX's unfunded past-service cost, which is funded over a period of years in
accordance with regulations of the Internal Revenue Service. Because this method
determines Pension Plan costs in the aggregate, costs have not been allocated to
the individuals in the Summary Compensation Table.
Effective December 1, 1986, the Board of Directors of BTX amended the
Pension Plan to provide: (1) that all persons in the Pension Plan would be
vested with the number of service years actually credited by December 31, 1986,
regardless of the number of years they had participated in the plan; and (2)
that all persons qualifying to participate in the Pension Plan after December 1,
1986, would become 100% vested after five years of service.
The following table sets forth, based upon certain assumptions, the
approximate annual benefits payable under the Pension Plan at normal retirement
age to persons retiring with the indicated average base salaries and years of
credited service:
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE(2)
----------------------------------------------------------------------------------------
REMUNERATION(1) 10 15 20 25 30 35
- --------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 14,700 $ 22,050 $ 29,400 (same as amounts payable
150,000 22,200 33,300 44,400 after 20 years; no additional
200,000 29,700 44,550 59,400 credit may be earned)
235,840(3) 35,076 52,614 70,152
</TABLE>
- ---------------
(1) Compensation covered by the Pension Plan is equal to the salary shown in the
Summary Compensation Table for each of the executive officers shown, except
that Mr. Collins' compensation covered by the Pension Plan is limited to
$235,840 (see footnote (3)).
(2) Benefits shown are computed based on straight life annuities with a 10-year
guarantee and are not subject to deduction for social security, but are
subject to withholding for federal income tax purposes.
(3) Maximum annual retirement income of $115,641 is permitted under the Internal
Revenue Code, as amended; the maximum compensation allowed for retirement
benefit computations is $235,840.
The amounts of current annual covered compensation and the credited years
of service under the Pension Plan at December 31, 1993, for each of the
executive officers of BTX named in the Summary Compensation Table are as
follows:
<TABLE>
<CAPTION>
CURRENT ANNUAL
COMPENSATION CREDITED YEARS
COVERED BY THE OF SERVICE AT
NAME OF INDIVIDUAL PENSION PLAN DECEMBER 31, 1993
-------------------------------------------- -------------- -----------------
<S> <C> <C>
Nathan C. Collins........................... $235,840 6
David F. Weaver............................. 107,500 6
John G. Sprengle............................ 84,500 6
Richard H. Braucher......................... 91,800 15
Jerry V. Garrett............................ 90,000 6
</TABLE>
EMPLOYMENT AGREEMENT
In 1987 Mr. Collins entered into an employment agreement with BTX to serve
as the Chairman of the Board, President and Chief Executive Officer of BTX for
the period from November 1, 1987 to January 2,
28
<PAGE> 31
1991. For services rendered under the agreement, Collins received an annual
salary of $250,000, a bonus of $100,000 for 1988 payable on January 2, 1989, use
of an automobile, and reimbursement of reasonable business expenses. He also
participated in all benefits provided generally to employees of BTX.
As additional compensation, in 1987 BTX granted to Collins 109,500 shares
of Common Stock as a stock grant and options to purchase 109,500 shares of
Common Stock. These options were canceled in 1990. The agreement also provides
that BTX will indemnify and advance expenses to Collins to the maximum extent
permitted by applicable law with respect to any legal proceedings arising from
his employment, provided his conduct meets specified standards. Prior to the
expiration of its stated term, the agreement will terminate upon death or
disability and may be terminated by Collins, by BTX with or without cause or
upon request by any regulatory authority with specified severance arrangements.
In 1990 the Board of Directors of BTX entered into a restatement and
extension of the 1987 employment agreement with Collins. Under this contract,
Collins' employment was extended through January 2, 1993, at an annual salary of
$250,000. As additional compensation, Collins was granted options to purchase
1,000,000 shares of Common Stock at an exercise price of 25 cents per share, the
fair market value at the date of grant.
In May of 1991 the Board of Directors, in order to insure that BTX would
continue to have Mr. Collins' service and leadership for several reasons,
including the need to complete the Company's financial turnaround and to
facilitate its search for additional capital, amended his employment agreement
to provide that the term shall be automatically extended each month so that at
all times the remaining term is 24 months. The contract was also amended to
provide that Collins will be paid a bonus for any year in which the Company has
positive operating earnings or meets other predetermined objectives established
by the Board of Directors. Usually the bonus will be equal to 5% of the
Company's net operating earnings as determined by the Board but other factors
may be used in making the final determination. Nevertheless, under no
circumstances can the bonus in any one year exceed $100,000. Pursuant to this
contract, Collins was paid a bonus of $25,000 in 1992 with respect to BTX's 1991
results and $23,200 in 1993 with respect to BTX's 1992 results. He was paid zero
in 1994 with respect to BTX's 1993 results.
The Board of Directors also established a depository agreement with an
independent trust company whereby BTX deposited approximately $150,000 of U.S.
Government securities with that trust company to insure that BTX will honor its
obligation to pay severance to Mr. Collins in the event that BTX were to
terminate his contract prematurely.
In the event of a "change of control" of BTX, Mr. Collins would be entitled
to receive a termination benefit of $500,000 if he is terminated or if his
position is materially diminished or reduced during the term of the contract. A
"change of control" is defined as either the acquisition of 25% or more of the
outstanding voting securities of BTX pursuant to any transaction or combination
of transactions by any person or group within the meaning of the Securities
Exchange Act of 1934, or the change within any one-year period in a majority of
the members of the Board of Directors. If Proposal No. 1 is approved by the
stockholders a "change of control" will occur. BTX has no reason to believe that
First Banks has any intention to terminate Mr. Collins or diminish or reduce his
position and, in fact, the owner of First Banks has indicated that he intends to
retain Mr. Collins in his present position for at least two years. Nevertheless,
if the Board of Directors of BTX were to terminate Mr. Collins without cause
during the term of his employment contract, he would be entitled to receive a
severance payment of $500,000.
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Board of Directors' Personnel Committee serves as BTX's Compensation
Committee (the "Committee"). The Committee has among its duties the
responsibility for establishing and reviewing the compensation and benefits of
the senior managers of BTX and its subsidiaries, including the compensation of
the Chairman and the other executive officers. The Committee actively advises
and assists management in
29
<PAGE> 32
formulating and in implementing policies designed to assure the selection,
development and retention of key personnel.
Under the guidance of the Committee, BTX's compensation policies have been
cast within the larger framework of managing the company toward overall enhanced
profitability and increased stockholder value. Accordingly, two principles at
the core of BTX's compensation policy for senior managers are (i) aligning the
financial interests of the senior managers with those of the BTX's stockholders
and (ii) rewarding the senior managers for corporate and personal performance.
These principles are reflected in the structure of BTX's compensation program
for senior managers which consists of three basic components: base salary, cash
bonus, and awards under the 1990 Stock Option Plan (the "Option Plan"). In
creating this structure, the Committee has consciously placed an increasing
emphasis on the "at risk" elements of compensation for senior managers. As a
result, base salaries for the Chairman and most of the other senior managers
have been frozen at 1987 levels. Cash bonuses and awards under the Option Plan
are variable and tied to corporate and individual performance in a manner that
is believed by the Committee to encourage managers to continually focus on
increasing the profitability of BTX and, thereby, enhancing long-term
stockholder value.
BASE SALARY
Due to BTX's lack of profitability, the base salary for the Chairman
(Nathan C. Collins) and most of the other senior managers has not been increased
since they were hired as part of the team assembled between 1987 and 1989 (after
the restructuring of BTX in 1987) and which was geared toward returning BTX to
profitable operations, while increasing capital and providing quality service to
customers and enhancing the value of the stockholders' investment. On an
extremely selective basis, the salaries for a few senior managers have been
increased modestly due to changes in the nature and extent of their
responsibilities, although there were no such increases in 1993. Annually the
Chairman and the Committee review each manager's performance against various
pre-established objectives and the Committee makes a similar assessment of the
Chairman's performance (see the separate discussion on the Chairman's
Compensation). Salary levels are not directly related to BTX's profitability
performance. The pre-established objectives for the executive officers of BTX
vary widely, one from the other, and usually are different for each officer each
year. The objectives are used to measure the performance of each individual but
have no relationship to the salary paid to that individual. There have been no
increases in any of the salaries of the five highest paid executives of BTX
since 1988.
CASH BONUSES
Near the end of each year the Board of Directors formulates a bonus program
for the senior managers for the following fiscal year which is tied to specific
corporate performance objectives for that fiscal year. To enhance the "team
approach" these objectives have been concentrated on profitable operations for
BTX and its financial turnaround rather than specific objectives for each
manager. For the 1993 fiscal year the target was a specific dollar amount of
profit for BTX. Since that objective was not met, no cash bonuses were paid with
respect to BTX's financial results for 1993. One senior officer was awarded a
$5,000 cash bonus as a result of the Committee's assessment of his individual
performance and his extraordinary contribution to BTX's earnings. For a
discussion of the cash bonus for the Chairman, see "The Chairman's Compensation"
below.
In the last year for which bonuses were paid (1992), the Board of Directors
had established a goal of total profits of at least $1 million. Since that goal
was met, the Board authorized payment of a cash bonus equal to ten percent of
the base salary to each of the nine senior managers who report directly to the
Chief Executive Officer. Mr. Collins, pursuant to his employment contract, was
paid a cash bonus of $23,200, equal to 5% of only BTX's net operating earnings
(which is determined based on net income, excluding the effects of adjustments
not arising from banking operations). The profitability goal for 1993 was not
met and no cash bonuses were paid to the nine senior managers, except that the
Board approved a $5,000 bonus to Mr. Garrett in recognition of his extraordinary
performance during the year in managing the Bank's consumer lending division and
consummating sales of pools of loans to unrelated parties. The calculation
regarding Mr. Collins' bonus for 1993, which was waived, is discussed below
under the heading "The Chairman's Compensation for 1993."
30
<PAGE> 33
In December of each year, after the Board has reviewed and evaluated the
proposed budget for the next fiscal year, the Board establishes the level of
profitability above which cash bonuses can be earned by the senior managers if
BTX, in fact, achieves that profit goal in that following fiscal year. Although
the procedure has differed from year to year, in December of 1993 the Board
established three tiers within the 1994 bonus program. If BTX's net profit level
for 1994 exceeds 50 basis points on average total assets, a bonus equal to 5% of
base salary may be awarded; if the net profit level achieved exceeds 75 basis
points, a bonus equal to 10% of base salary may be awarded; and if the net
profit level achieved exceeds 100 basis points, a bonus equal to 20% of base
salary may be awarded. In all cases, no bonuses are paid until the Board reviews
and evaluates the Company's actual results for the year in question and decides
to award bonuses.
OPTION PLAN AWARDS
In 1990 the Board of Directors formulated the 1990 Stock Option Plan in
order to establish a long-term incentive component of total compensation for the
senior managers. This was designed to align the financial interest of these
managers and BTX's stockholders more closely and to enable the Chairman to
retain the team of managers which he had carefully selected in order to
facilitate the company's turnaround, growth and return to profitability. While
no grants have been made since 1991, the Committee will periodically review the
desirability of making additional grants as circumstances may warrant.
THE CHAIRMAN'S COMPENSATION
The FDIC's recapitalization of BancTEXAS Group Inc. in 1987 mandated the
recruitment of a new Chief Executive Officer. The Board of Directors engaged
both outside bank consultants and an executive recruiting firm to assist them in
establishing hiring criteria and recommending compensation guidelines. The Board
found difficulty in recruiting candidates for this position who could meet the
high standards set by the Board and in clearing potential candidates with the
various banking regulators. BTX was experiencing operational difficulties and
the senior staff had been significantly eroded because of concerns as to the
viability of BTX. The Board decided that its candidate would need broad banking
experiences including credit administration, branch banking, marketing, bank
operations, asset and liability management, as well as overall management and
leadership skills. It was recognized that, despite the large capital infusion in
1987, BTX was still a high-risk company and that in order to secure a qualified
Chairman a creative compensation package including a significant salary and an
employment contract along with standard benefits and some performance incentives
would have to be offered. The ultimate compensation package for the Chairman
(which was designed in consultation with both the banking consultants and the
search firm) was reviewed by the federal bank regulatory agencies and was then
adopted by the Board.
In January 1990 the company's flagship bank at that time (BancTEXAS Dallas)
was declared insolvent and placed in FDIC receivership. Because of this, there
arose serious questions about BTX's ability to continue to fund the Chairman's
contract. The Board determined that it was imperative to retain the Chairman due
to the extremely fragile nature of BTX's financial position in 1990 and in hopes
of saving the remainder of the company's value. The Directors elected to extend
the employment contract for two years and provide some assurances that cash
would be available to meet that obligation by funding the contract in a
specialized trust account managed by an outside third party. Despite the failure
of the Dallas bank, the directors could see that solid progress was underway,
but that it was critical to maintain the current leadership of the company if a
complete turnaround were ever to be achieved.
In May 1991 the Board of Directors, in order to insure that BTX would
continue to have Mr. Collins' service and leadership for several reasons,
including the need to complete the Company's financial turnaround and to
facilitate its search for additional capital, amended his employment agreement
to provide that the term shall be automatically extended each month so that at
all times the remaining term is 24 months. A specific bonus plan was also
incorporated in Mr. Collins' revised employment contract. This bonus is payable
based on BTX's profits and the achievement of other specific goals for Mr.
Collins, set annually by the Board, as yet another incentive to keep his
management skills and leadership in place.
31
<PAGE> 34
THE CHAIRMAN'S COMPENSATION FOR 1993
For 1993, Mr. Collins was paid his contractual salary of $250,000. The cash
bonus for the Chairman is to be determined separately pursuant to the terms of
his employment contract. Under that contract, he is entitled to receive a cash
bonus equal to five percent (5%) of the company's operating income. In 1993
BTX's operating income (excluding the $592,000 special charge resulting from the
settlement of a lawsuit) was $811,000; accordingly, Mr. Collins was
contractually entitled to receive $40,500. Mr. Collins waived his right to
receive this cash bonus because of the company's overall financial results for
1993.
In recognition of BTX's disappointing financial results for 1993 and the
continuing squeeze on the interest rate margin being suffered by the company and
its bank, Mr. Collins proposed that for 1994 his salary be reduced to $200,000
without otherwise waiving any contractual rights which he has. Accordingly, Mr.
Collins is currently being paid at that reduced rate.
THE FOREGOING REPORT HAS BEEN PRESENTED BY THE PERSONNEL COMMITTEE OF THE
BOARD OF DIRECTORS CONSISTING OF MESSRS. RICHARD L. BROWN AND THOMAS A. STANZEL.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche, the independent public accountants of
BTX for the 1991, 1992 and 1993 fiscal years, are expected to be present at the
Annual Meeting and such representatives will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
OTHER BUSINESS
Management knows of no other business to be presented at the Annual
Meeting. If, however, other matters should properly be presented at the Annual
Meeting or any adjournment(s) thereof, the person or person voting such proxy
will vote the proxy as in their discretion they may deem appropriate.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in BTX's proxy
statement for consideration at its Annual Meeting of Stockholders by submitting
proposals to BTX in a timely manner. In order to be so included for the 1994
Annual Meeting of Stockholders, stockholder proposals must be received by BTX by
December 31, 1994 and must otherwise comply with the requirements of Rule 14a-8.
The Bylaws of BTX provide that stockholders may only present proposals for
consideration at an Annual Meeting if the proposal is a proper subject for
action by stockholders and if they present such proposals to the Company's
Secretary during a prescribed time period in advance of such Annual Meeting. In
order to have proper proposals considered at the 1994 Annual Meeting, such
proposals must be received by the Secretary of BTX by December 31, 1994.
By Order of the Board of Directors,
/s/ RICHARD H. BRAUCHER
RICHARD H. BRAUCHER
Secretary
Dallas, Texas
July 15, 1994
32
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX I
STOCK PURCHASE AND OPERATING AGREEMENT
BY AND BETWEEN
BANCTEXAS GROUP INC.
A DELAWARE CORPORATION,
AND
FIRST BANKS, INC.,
A MISSOURI CORPORATION,
DATED MAY 19, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE ONE TERMS OF STOCK PURCHASE AND CLOSING
Section 1.01 Purchase and Sale of Class B Common Stock.......................... 1
Section 1.02 Closing............................................................ 1
Section 1.03 Closing Date....................................................... 1
Section 1.04 Actions At Closing................................................. 1
ARTICLE TWO REPRESENTATIONS OF BTX
Section 2.01 Organization and Capital Stock..................................... 2
Section 2.02 Authorization; No Defaults......................................... 3
Section 2.03 Subsidiaries....................................................... 3
Section 2.04 Financial Information.............................................. 4
Section 2.05 Absence of Changes................................................. 4
Section 2.06 Regulatory Enforcement Matters..................................... 4
Section 2.07 Tax Matters........................................................ 4
Section 2.08 Litigation......................................................... 4
Section 2.09 Employment Agreements.............................................. 4
Section 2.10 Reports............................................................ 5
Section 2.11 Investment Portfolio............................................... 5
Section 2.12 Loan Portfolio..................................................... 5
Section 2.13 Employee Matters and ERISA......................................... 5
Section 2.14 Title to Properties; Insurance..................................... 6
Section 2.15 Environmental Matters.............................................. 7
Section 2.16 Compliance with Law................................................ 7
Section 2.17 Brokerage.......................................................... 7
Section 2.18 Statements True and Correct........................................ 7
Section 2.19 Commitments and Contracts.......................................... 8
Section 2.20 Material Interest of Certain Persons............................... 8
Section 2.21 Conduct to Date.................................................... 8
ARTICLE THREE REPRESENTATIONS OF FBI
Section 3.01 Organization....................................................... 9
Section 3.02 Authorization...................................................... 9
Section 3.03 Available Funds.................................................... 9
Section 3.04 Financial Information.............................................. 9
Section 3.05 Absence of Changes................................................. 9
Section 3.06 Litigation......................................................... 9
Section 3.07 Compliance with Law................................................ 9
Section 3.08 Statements True and Correct........................................ 10
Section 3.09 No Defaults........................................................ 10
Section 3.10 Regulatory Enforcement Matters..................................... 10
Section 3.11 Brokerage.......................................................... 10
Section 3.12 Investment Intention; Accreditation................................ 10
ARTICLE FOUR PRE-CLOSING AGREEMENTS OF BTX
Section 4.01 Business in Ordinary Course........................................ 10
Section 4.02 Breaches........................................................... 12
Section 4.03 Submission to Stockholders......................................... 12
Section 4.04 Consummation of Agreement.......................................... 13
Section 4.05 Environmental Reports.............................................. 13
</TABLE>
i
<PAGE> 37
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.06 Access to Information.............................................. 13
Section 4.07 Consents and Notices............................................... 13
ARTICLE FIVE PRE-CLOSING AGREEMENTS OF FBI
Section 5.01 Regulatory Approvals............................................... 14
Section 5.02 Breaches........................................................... 14
Section 5.03 Consummation of Agreement.......................................... 14
ARTICLE SIX POST-CLOSING OPERATING AGREEMENTS
Section 6.01 Board of Director Representation................................... 14
Section 6.02 Antidilution....................................................... 14
Section 6.03 Registration Rights................................................ 15
Section 6.04 Restriction on Transfer............................................ 17
ARTICLE SEVEN CONDITIONS PRECEDENT TO STOCK PURCHASE
Section 7.01 Conditions to FBI's Obligations.................................... 17
Section 7.02 Conditions to BTX's Obligations.................................... 18
ARTICLE EIGHT TERMINATION OR ABANDONMENT
Section 8.01 Mutual Agreement................................................... 19
Section 8.02 Breach of Agreements............................................... 19
Section 8.03 Failure of Conditions.............................................. 19
Section 8.04 Approval Denial.................................................... 19
Section 8.05 Shareholder Approval Denial........................................ 19
Section 8.06 Regulatory Enforcement Matters..................................... 19
Section 8.07 Automatic Termination.............................................. 19
ARTICLE NINE CERTAIN PAYMENTS UPON TERMINATION OR ABANDONMENT
Section 9.01 Liabilities upon Termination of Agreement.......................... 19
Section 9.02 Payment Upon Occurrence of Triggering Event........................ 20
ARTICLE TEN GENERAL
Section 10.01 Confidential Information........................................... 20
Section 10.02 Publicity.......................................................... 20
Section 10.03 Return of Documents................................................ 20
Section 10.04 Notices............................................................ 21
Section 10.05 Nonsurvival of Representations, Warranties and Agreements.......... 21
Section 10.06 Costs and Expenses................................................. 21
Section 10.07 Entire Agreement................................................... 21
Section 10.08 Headings and Captions.............................................. 21
Section 10.09 Waiver, Amendment or Modification.................................. 22
Section 10.10 Rules of Construction.............................................. 22
Section 10.11 Counterparts....................................................... 22
Section 10.12 Successors and Assigns............................................. 22
Section 10.13 Governing Law; Assignment.......................................... 22
</TABLE>
EXHIBIT 1.04(a) -- BTX's Legal Opinion
EXHIBIT 1.04(b) -- FBI's Legal Opinion
EXHIBIT 4.03(a) -- BTX Restated Certificate of Incorporation
EXHIBIT 4.03(b) -- BTX Restated Bylaws
ii
<PAGE> 38
STOCK PURCHASE AND OPERATING AGREEMENT
This is a STOCK PURCHASE AND OPERATING AGREEMENT (this "Agreement") made
and entered into as of May 19, 1994, by and between FIRST BANKS, INC., a
Missouri corporation, ("FBI"), and BANCTEXAS GROUP INC., a Delaware corporation,
("BTX").
RECITALS
A. BTX is a bank holding company organized under the laws of the State of
Delaware and FBI is a bank holding company organized under the laws of the State
of Missouri.
B. Upon the terms and subject to the conditions of this Agreement, BTX
desires to sell to FBI, and FBI desires to purchase from BTX, 37,500,000 shares
of a new class of common stock to be authorized by BTX and designated Class B
Common Stock (the "Class B Common Stock"). The purchase and sale referred to in
the preceding sentence is hereinafter referred to as the "Stock Purchase".
In consideration of the premises and the mutual terms and provisions set
forth in this Agreement, the parties agree as follows:
ARTICLE ONE
TERMS OF STOCK PURCHASE AND CLOSING
SECTION 1.01. Purchase and Sale of Class B Common Stock. Upon the terms and
subject to the conditions of this Agreement, at the Closing (as defined in
Section 1.02 hereof) on the Closing Date (as defined in Section 1.03 hereof),
FBI shall purchase from BTX, and BTX shall sell to FBI, 37,500,000 shares of
Class B Common Stock to be authorized and issued by BTX as provided in Section
4.03 hereof, for a purchase price of Thirty Million Dollars ($30,000,000) (the
"Purchase Price").
SECTION 1.02. Closing. The closing of the Stock Purchase (the "Closing")
shall take place at the main offices of FBI in St. Louis, Missouri, at 10:00
a.m. Central Time on the Closing Date.
SECTION 1.03. Closing Date. The Closing shall take place on a date mutually
agreeable to FBI and BTX, but in no event more than twenty (20) business days,
after all of the conditions in Sections 7.01(d) and 7.02(d) have been satisfied
or waived by the appropriate party (the "Closing Date").
SECTION 1.04. Actions at Closing.
(a) At the Closing, BTX shall deliver to FBI:
(i) one or more certificates representing the Class B Common Stock
registered in the name of FBI;
(ii) A copy of the BTX Restated Certificate of Incorporation (as
defined in Section 4.03(a) and attached hereto as Exhibit 4.03(a))
certified, as of a recent date, as true and correct by the Secretary of
State of the State of Delaware);
(iii) A copy of the BTX Restated Bylaws (as defined in Section 4.03(b)
and attached hereto as Exhibit 4.03(b)) certified, as of the Closing Date,
as true and correct by the Secretary of BTX;
(iv) A Certificate of the Delaware Secretary of State, dated a recent
date, stating that BTX is in good standing;
(v) a Certificate signed by an appropriate officer of BTX stating that
(A) each of the representations and warranties contained in Article Two is
true and correct in all material respects at the time of the Closing with
the same force and effect as if such representations and warranties had
been made at Closing, and (B) all of the conditions set forth in Sections
7.01(b) and 7.01(d) have been satisfied or waived as provided therein;
<PAGE> 39
(vi) a certified copy of the resolutions of BTX's Board of Directors
and stockholders, as required for valid approval of the execution of this
Agreement and the consummation of the Stock Purchase, the Amendments (as
defined in Section 4.03(b) hereof) and the other transactions contemplated
hereby;
(vii) a legal opinion of counsel for BTX, in form reasonably
acceptable to FBI's counsel, opining with respect to the matters listed on
Exhibit 1.04(a) hereto.
(b) At the Closing, FBI shall deliver to BTX:
(i) the Purchase Price by wire transfer of immediately available funds
to the account of BTX that BTX shall designate at least two (2) business
days prior to the Closing Date;
(ii) a Certificate signed by an appropriate officer of FBI stating
that (A) each of the representations and warranties contained in Article
Three is true and correct in all material respects at the time of the
Closing with the same force and effect as if such representations and
warranties had been made at Closing and (B) all of the conditions set forth
in Sections 7.02(b) and 7.02(d) (but only with respect to approvals other
than by BTX' stockholders) have been satisfied or waived as provided
therein;
(iii) a certified copy of the resolutions of FBI's Board of Directors
authorizing the execution of this Agreement and the consummation of the
transactions contemplated hereby; and
(iv) a legal opinion of counsel for FBI, in form reasonably acceptable
to BTX's counsel, opining with respect to the matters listed on Exhibit
1.06(b) hereto.
ARTICLE TWO
REPRESENTATIONS OF BTX
BTX hereby makes the following representations and warranties:
SECTION 2.01. Organization and Capital Stock.
(a) BTX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
own all of its property and assets, to incur all of its liabilities and to carry
on its business as now being conducted.
(b) As of the date hereof, the authorized capital stock of BTX consists of
(i) 50,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), of which, as of the date hereof, 20,047,025 shares are issued and
outstanding, and (ii) 3,000,000 shares of preferred stock, par value $1.00 per
share, of BTX (the "BTX Preferred") of which no shares are issued and
outstanding. All of the issued and outstanding shares of Common Stock are duly
and validly issued and outstanding and are fully paid and non-assessable. None
of the outstanding shares of Common Stock has been issued in violation of any
preemptive rights of the current or past stockholders of BTX. As of the date
hereof, BTX had granted and outstanding (i) stock options representing the right
to acquire an aggregate of 1,921,500 shares of Common Stock for an aggregate
exercise price of $483,500 (the "BTX Stock Options"); (ii) warrants, dated
November 30, 1990 (the "F.D.I.C. Warrants") granting the Federal Deposit
Insurance Corporation (the "F.D.I.C.") the right to acquire an aggregate of
1,970,033 shares of Common Stock at a price of $0.05 per share (the "F.D.I.C.
Warrants"); and (iii) warrants, dated July 17, 1987, granting the following
financial institutions the right to acquire an aggregate of 984,943 shares of
Common Stock at a price of $5.41 per share (the "Lender Warrants") (a) the
F.D.I.C. as receiver for Continental Illinois National Bank and Trust Company of
Chicago (warrants to purchase 347,646 shares), (b) Bankers Trust Company
(warrants to purchase 200,686 shares), (c) Irving Trust Company (warrants to
purchase 85,020 shares), (d) Bank of America NT&SA (warrants to purchase 113,751
shares), (e) Citibank, N.A. (warrants to purchase 128,920 shares), and (f)
Liberty National Bank and Trust Company (warrants to purchase 108,920 shares)).
As of the date hereof, BTX had reserved 4,876,476 shares for these purposes.
Except as disclosed in Section 2.01(b) of that certain written document
delivered by BTX to FBI and executed by both BTX and FBI concurrently with the
delivery and execution of this Agreement (the "Disclosure Schedule"),each
Certificate representing shares of Common Stock issued by BTX in replacement of
any Certificate theretofore issued by it which was claimed
2
<PAGE> 40
by the record holder thereof to have been lost, stolen or destroyed was issued
by BTX only upon receipt of an affidavit of lost stock certificate and a bond
sufficient to indemnify BTX against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such Certificate or the
issuance of such replacement Certificate.
(c) Except as set forth in subsection 2.01(b), and as contemplated by this
Agreement, there are no shares of capital stock or other equity securities of
BTX issued or outstanding and there are no outstanding options, warrants, rights
to subscribe for, calls, or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of BTX or contracts, commitments, understandings or arrangements
by which BTX is or may be obligated to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any additional
shares of its capital stock.
(d) The shares of Class B Common Stock that are to be issued to FBI
pursuant hereto will be, when so authorized and issued in accordance with the
terms of this Agreement, validly issued and outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
SECTION 2.02. Authorization: No Defaults.
(a) BTX's Board of Directors has, by all appropriate action, approved this
Agreement, the Stock Purchase and the Amendments and authorized the execution
hereof and thereof on its behalf by its duly authorized officers and the
performance by BTX of its obligations hereunder and thereunder, subject, in the
case of obligations contemplated hereby to be satisfied after the approvals of
the transaction contemplated by this Agreement by BTX's shareholders and
applicable regulatory authorities, to receipt of such approvals.
(b) Nothing in the Restated Certificate of Incorporation or Bylaws of BTX,
as amended, or any other agreement, instrument, decree, proceeding, law or
regulation (except as specifically referred to in or contemplated by this
Agreement) by or to which it or any of its subsidiaries are bound or subject
would prohibit or inhibit BTX from consummating this Agreement, the Stock
Purchase and the Amendments on the terms and conditions (including without
limitation the requisite approval of BTX's stockholders) herein and therein
contained. This Agreement has been duly and validly executed and delivered by
BTX and constitutes a legal, valid and binding obligation of BTX, enforceable
against BTX in accordance with its terms (including without limitation the terms
hereof requiring the necessary approval of BTX's stockholders). BTX and its
subsidiaries are neither in default under nor in violation of any provision of
their articles or certificates of incorporation, bylaws, or any promissory note,
indenture or any evidence of indebtedness or security therefor, lease, contract,
purchase or other commitment or any other agreement which is material to BTX and
its subsidiaries taken as a whole.
SECTION 2.03. Subsidiaries. BTX's banking subsidiary, BankTEXAS N.A. (the
"Bank"), and BTX's other direct or indirect subsidiaries (hereinafter referred
to collectively as the "subsidiaries"), the names and jurisdiction of
incorporation of which are disclosed in Section 2.03 of the Disclosure Schedule,
are each duly organized, validly existing and in good standing under the laws of
the jurisdiction of their incorporation and each of the subsidiaries has the
corporate power to own its respective properties and assets, to incur its
respective liabilities and to carry on its respective business as now being
conducted. The number of issued and outstanding shares of capital stock of each
such subsidiary is set forth in Section 2.03 of the Disclosure Schedule, all of
which shares (except as may be otherwise there specified) are owned by BTX or
BTX's subsidiaries, as the case may be, free and clear of all liens,
encumbrances, rights of first refusal, options or other restrictions of any
nature whatsoever, except for assessibility under 12 U.S.C. Section 55 and as
may be disclosed in Section 2.03 of the Disclosure Schedule. There are no
options, warrants or rights outstanding to acquire any capital stock of any of
BTX's subsidiaries and no person or entity has any other right to purchase or
acquire any unissued shares of stock of any of BTX's subsidiaries, nor does any
such subsidiary have any obligation of any nature with respect to its unissued
shares of stock. Except as may be disclosed in Section 2.03 of the Disclosure
Schedule, neither BTX nor any of BTX's subsidiaries is a party to any
partnership or joint venture or owns an equity interest in any other business or
enterprise.
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SECTION 2.04. Financial Information. The audited consolidated balance
sheets of BTX and its subsidiaries as of December 31, 1993 and 1992 and related
consolidated income statements and statements of changes in shareholders' equity
and of cash flows for the three years ended December 31, 1993, together with the
notes thereto, included in BTX's Annual Report on Form 10-K for the year ended
December 31, 1993, as currently on file with the Securities and Exchange
Commission (the "S.E.C."), and the unaudited consolidated balance sheets of BTX
and its subsidiaries as of March 31, 1994 and the related unaudited consolidated
income statements and statements of changes in shareholders' equity and cash
flows for the three months then ended included in BTX's Quarterly Report on Form
10-Q for the quarter then ended, as currently on file with the S.E.C. (the "BTX
3/31 10-Q"), and the year-end and quarterly Reports of Condition and Report of
Income of Bank for 1993 and the quarter ended March 31, 1994, as filed with the
Office of the Comptroller of the Currency (the "O.C.C.") (together, the "BTX
Financial Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein and except for regulatory reporting differences required by Bank's
reports) and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of the respective entity and its respective consolidated subsidiaries as
of the dates and for the periods indicated (subject, in the case of interim
financial statements, to normal recurring year-end adjustments, none of which
will be material).
SECTION 2.05. Absence of Changes. Since December 31, 1993, except to the
extent of any disclosures made in the BTX 3/31 10-Q, there has not been any
material adverse change in the financial condition, the results of operations or
the business or prospects of BTX and its subsidiaries taken as a whole, nor have
there been any events or transactions having such a material adverse effect
which should be disclosed in order to make the BTX Financial Statements not
misleading. Since January 31, 1994 (the date of the most recent OCC
examination), there has been no material adverse change in the financial
condition, the results of operations or the business of Bank except for any such
changes as may be disclosed in Bank's Reports of Condition and Income filed with
the O.C.C since such date and prior to the date hereof.
SECTION 2.06. Regulatory Enforcement Matters. Neither BTX nor any of its
subsidiaries is subject to, or has received any notice or advice that it may
become subject to, any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits or any other governmental
agency having supervisory or regulatory authority with respect to BTX or any of
its subsidiaries.
SECTION 2.07. Tax Matters. BTX's federal income tax returns have not been
audited. BTX and its subsidiaries have filed all federal, state and material
local tax returns due in respect of any of their businesses or properties in a
timely fashion and have paid or made provision for all amounts due shown on such
returns. All such returns fairly reflect the information required to be
presented therein. All provisions for accrued but unpaid taxes contained in the
BTX Financial Statements were made in accordance with generally accepted
accounting principles and in the aggregate do not materially fail to provide for
potential tax liabilities. Except as may be disclosed in Section 2.07 of the
Disclosure Schedule, there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment of any tax or
deficiency against BTX or any of its subsidiaries nor are there any actions,
suits, proceedings, investigations or claims now pending or, to the knowledge of
BTX, threatened, against BTX or any of its subsidiaries in respect to any tax or
assessment, or any matters under discussion with any federal, state, foreign or
local authority relating to any taxes or assessments, or any claims for any
additional taxes or assessments asserted by any such authority.
SECTION 2.08. Litigation. Except as may be disclosed in Section 2.08 of the
Disclosure Schedule, there is no litigation, claim or other proceeding pending
or, to the knowledge of BTX, threatened, against BTX or any of its subsidiaries,
or of which the property of BTX or any of its subsidiaries is or would be
subject.
SECTION 2.09. Employment Agreements. Except as may be disclosed in Section
2.09 of the Disclosure Schedule, neither BTX nor any of its subsidiaries is a
party to or bound by any contract for the employment, retention or engagement,
or with respect to the severance, of any officer, employee, agent, consultant or
other person or entity which, by its terms, is not terminable by BTX or such
subsidiary on thirty (30) days written
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notice or less without the payment of any amount by reason of such termination.
A true, accurate and complete copy of each written agreement disclosed in
Section 2.09 of the Disclosure Schedule and any and all amendments or
supplements thereto has been made available to FBI.
SECTION 2.10. Reports. Except as may be disclosed in Section 2.10 of the
Disclosure Schedule, since January 1, 1992 (or, in the case of subsidiaries of
BTX, the date of acquisition thereof by BTX, if later) BTX and each of its
subsidiaries has filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the S.E.C.; (ii) the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"); (iii) the O.C.C.; (iv) the F.D.I.C.; (v) any state
securities or banking authorities having jurisdiction; (vi) the New York Stock
Exchange, Inc. (the "N.Y.S.E."), and (vii) any other governmental authority with
jurisdiction over BTX or any of its subsidiaries. As of their respective dates,
each of such reports and documents, including any financial statements, exhibits
and schedules thereto, complied in all material respects with the relevant
statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed, and did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.11. Investment Portfolio. All United States Treasury securities,
obligations of other United States Government agencies and corporations,
obligations of States and political subdivisions of the United States and other
investment securities held by BTX and its subsidiaries, as reflected in the
latest consolidated balance sheet of BTX included in the BTX Financial
Statements, are carried in accordance with generally accepted accounting
principles.
SECTION 2.12. Loan Portfolio. Except as may be disclosed in Section 2.12 of
the Disclosure Schedule, (i) all loans and discounts shown on the BTX Financial
Statements at December 31, 1993 or which were entered into after December 31,
1993, but before the Closing Date were and will be made in all material respects
for good, valuable and adequate consideration in the ordinary course of the
business of BTX and its subsidiaries, in accordance in all material respects
with sound banking practices, and are not subject to any material known
defenses, setoffs or counterclaims (except such defenses, setoffs or
counterclaims as may be specifically noted in a loan or litigation file of
Company made available to FBI prior to the date hereof), including without
limitation any such as are afforded by usury or truth in lending laws, except as
may be provided by bankruptcy, insolvency or similar laws or by general
principles of equity and except that, in the case of loan workouts and
restructurings, some of such loans may not meet normal, prudent underwriting
criteria for new loans; (ii) the notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be, in all material respects,
enforceable, valid, true and genuine and what they purport to be; and (iii) BTX
and its subsidiaries have complied and will prior to the Closing Date comply
with all laws and regulations relating to such loans, or to the extent there has
not been such compliance, such failure to comply will not materially interfere
with the collection of any such loan.
SECTION 2.13. Employee Matters and Erisa.
(a) Neither BTX nor any of its subsidiaries has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of BTX or any of its subsidiaries and to the knowledge of BTX there is
no present effort nor existing proposal to attempt to unionize any group of
employees of BTX or any of its subsidiaries.
(b) (i) BTX and its subsidiaries are and have been in material compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, including, without limitation,
any such laws respecting employment discrimination and occupational safety and
health requirements, and neither BTX nor any of its subsidiaries is engaged in
any unfair labor practice; (ii) there is no material unfair labor practice
complaint against BTX or any subsidiary pending or, to the knowledge of BTX,
threatened before the National Labor Relations Board; (iii) there is no labor
dispute, strike, slowdown or stoppage actually pending or, to the knowledge of
BTX, threatened against or directly
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affecting BTX or any subsidiary; and (iv) neither BTX nor any subsidiary has
experienced any material work stoppage or other material labor difficulty during
the past five years.
(c) Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, neither BTX nor any subsidiary maintains, contributes to or
participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("E.R.I.S.A."), or any nonqualified employee benefit plans or
deferred compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or current
employees of BTX or any subsidiary (the "Employee Plans"). To the knowledge of
BTX, no present or former employee of BTX or any subsidiary has been charged
with breaching nor has breached a fiduciary duty under any of the Employee
Plans. Neither BTX nor any of its subsidiaries participates in, nor has it in
the past five years participated in, nor has it any present or future obligation
or liability under, any multiemployer plan (as defined at Section 3(37) of
E.R.I.S.A.). Except as may be separately disclosed in Section 2.13(c) of the
Disclosure Schedule, neither BTX nor any subsidiary maintains, contributes to,
or participates in, any plan that provides health, major medical, disability or
life insurance benefits to former employees of BTX or any subsidiary.
(d) All liabilities of the Employee Plans have been funded on the basis of
consistent methods in accordance with sound actuarial assumptions and practices,
and no Employee Plan, at the end of any plan year, or at December 31, 1993, had
or has had an accumulated funding deficiency. No actuarial assumptions have been
changed since the last written report of actuaries on such Employee Plans. All
insurance premiums (including premiums to the Pension Benefit Guaranty
Corporation) have been paid in full, subject only to normal retrospective
adjustments in the ordinary course. Except as may be noted on the BTX Financial
Statements, BTX and its subsidiaries have no contingent or actual liabilities
under Title IV of E.R.I.S.A. No accumulated funding deficiency (within the
meaning of Section 302 of E.R.I.S.A. or Section 412 of the Internal Revenue Code
of 1986, as amended (the "Code")) has been incurred with respect to any of the
Employee Plans, whether or not waived. No reportable event (as defined in
Section 4043 of E.R.I.S.A.) has occurred with respect to any of the Employee
Plans as to which a notice would be required to be filed with the Pension
Benefit Guaranty Corporation. No claim is pending, or to the knowledge of BTX
threatened or imminent with respect to any Employee Plan (other than a routine
claim for benefits for which plan administrative review procedures have not been
exhausted) for which BTX or any of its subsidiaries would be liable after
December 31, 1993, except as is reflected on the BTX Financial Statements. After
December 31, 1993, BTX and its subsidiaries have no liability for excise taxes
under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code or for a fine
under Section 502 of E.R.I.S.A. with respect to any Employee Plan. All Employee
Plans have been operated, administered and maintained materially in accordance
with the terms thereof and in material compliance with the requirements of all
applicable laws, including, without limitation, E.R.I.S.A.
SECTION 2.14. Title to Properties; Insurance. With respect to all real
estate owned by BTX and its subsidiaries except for Other Real Estate Owned
("O.R.E.O."), as such real estate is internally classified on the books of BTX
and its subsidiaries, BTX and its subsidiaries have marketable title, free and
clear of all liens, charges and encumbrances (except taxes which are a lien but
not yet payable and liens, charges or encumbrances reflected in the BTX
Financial Statements and easements, rights-of-way, and other restrictions which
are not material) to all of their real properties. With respect to O.R.E.O., BTX
and its subsidiaries have such title thereto as is stated in the respective
policy of title insurance thereon, a copy of each of which such policies has
been made available to FBI. All leasehold interests for real property and any
material personal property used by BTX and its subsidiaries in their businesses
are held pursuant to lease agreements which are valid and enforceable in
accordance with their terms. All such properties comply in all material respects
with all applicable private agreements, zoning requirements and other
governmental laws and regulations relating thereto and there are no condemnation
proceedings pending or, to the knowledge of BTX, threatened with respect to such
properties. BTX and its subsidiaries have valid title or other ownership rights
under licenses to all material intangible personal or intellectual property used
by BTX or its subsidiaries in their business, free and clear of any claim,
defense or right of any other person or entity which is material to such
property, subject only to rights of the licensors pursuant to applicable license
agreements, which rights do not materially
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adversely interfere with the use of such property. All material insurable
properties owned or held by BTX and its subsidiaries are adequately insured by
financially sound and reputable insurers in such amounts and against fire and
other risks insured against by extended coverage and public liability insurance,
as is customary with bank holding companies of similar size. Section 2.14 of the
Disclosure Schedule includes a description of each parcel of real property
(including O.R.E.O.) owned, leased or operated by BTX or its subsidiaries or in
which any of them acts or has the power to act in a fiduciary capacity.
SECTION 2.15. Environmental Matters.
(a) As used in this Agreement, "Environmental Laws" means all local, state
and federal environmental, health and safety laws and regulations in all
jurisdictions in which BTX and its subsidiaries have done business or owned,
leased or operated property, including, without limitation, the Federal Resource
Conservation and Recovery Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Clean Water Act, the Federal Clean
Air Act, and the Federal Occupational Safety and Health Act.
(b) Except as may be disclosed in Section 2.15 of the Disclosure Schedule,
neither the conduct nor operation of BTX or its subsidiaries nor any condition
of any property presently or previously owned, leased or operated by any of them
on their own behalf or in a fiduciary capacity violates or violated
Environmental Laws in any respect material to the business of BTX and its
subsidiaries taken as a whole and no condition or event has occurred with
respect to any of them or any such property that, with notice or the passage of
time, or both, would constitute a violation material to the business of BTX and
its subsidiaries taken as a whole of Environmental Laws or obligate (or
potentially obligate) BTX or its subsidiaries to remedy, stabilize, neutralize
or otherwise alter the environmental condition of any such property where the
aggregate cost of such actions would be material to BTX and its subsidiaries
taken as a whole. Except as may be disclosed in Section 2.15 of the Disclosure
Schedule, neither BTX nor any of its subsidiaries has received any notice from
any person or entity that BTX or its subsidiaries or the operation or condition
of any property ever owned, leased or operated by any of them on their own
behalf or in a fiduciary capacity are or were in violation of any Environmental
Laws or that BTX or its subsidiaries are responsible (or potentially
responsible) for remedying, or the cleanup of, any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at, on or beneath any such
property.
SECTION 2.16. Compliance with Law. BTX and its subsidiaries have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and are in compliance in all material respects with all
applicable laws and regulations.
SECTION 2.17. Brokerage. Except for fees payable to McKenna & Company by
BTX, there are no existing claims or agreements for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by BTX or its subsidiaries.
SECTION 2.18. Statements True and Correct. None of the information supplied
or to be supplied by BTX for inclusion in (i) the Proxy Statement (as defined in
Section 4.03); and (iii) any other documents to be filed with the S.E.C. or any
banking or other regulatory authority in connection with the transactions
contemplated hereby, will, at the respective times such documents are filed,
and, in the case of the Proxy Statement, when first mailed to the stockholders
of BTX, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Stockholders' Meeting (as defined in
Section 4.03), be false or misleading with respect to any material fact, or omit
to state any material fact required to be stated in order to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that BTX is responsible for
filing with the S.E.C. or any other regulatory authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law and the applicable rules and regulations
thereunder.
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SECTION 2.19. Commitments and Contracts.
(a) Except as set forth in Section 2.19 of the Disclosure Schedule, (and
with a true and correct copy of the document or other item in question made
available to FBI for inspection), neither BTX nor any of its subsidiaries is a
party or subject to any of the following, (whether written or oral, express or
implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
BTX Financial Statements relating to the borrowing of money by BTX or any
of its subsidiaries or the guarantee by BTX or any of its subsidiaries of
any such obligation (other than trade payables or instruments related to
transactions entered into in the ordinary course of business by BTX or any
of its subsidiaries, such as deposits, Fed Funds borrowings, FHL Bank
advances and repurchase agreements), other than such agreements, indentures
or instruments providing for annual payments of less than $10,000;
(iii) any contract containing covenants which limit the ability of BTX
to compete in any line of business or with any person or containing any
restriction of the geographical area in which, or method by which, BTX or
any of its subsidiaries may carry on its business (other than as may be
required by law or any applicable regulatory authority); or
(iv) any lease with annual rental payments aggregating $25,000 or
more.
SECTION 2.20. Material Interest of Certain Persons. Except as set forth in
Section 2.20 of the Disclosure Schedule:
(a) No officer or director of BTX or any "associate" (as such term is
defined in Rule 14a-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of any such officer or director, has any material
interest in any material contract or property (real or personal, tangible
or intangible), used in or pertaining to the business of BTX and its
subsidiaries.
(b) All outstanding loans in excess of $100.000 from Bank to any
present officer, director, employee or any associate or related interest of
any such person which was or would be required under any rule or regulation
to be approved by or reported to Bank's Board of Directors ("Insider
Loans") were approved by or reported to the such Board of Directors in
accordance with applicable law and regulations.
SECTION 2.21. Conduct to Date. Except as set forth in Section 2.21 of the
Disclosure Schedule, from and after December 31, 1993, through the date of this
Agreement, neither BTX nor any of its subsidiaries has (i) failed to conduct its
business in the ordinary and usual course consistent with past practices; (ii)
issued, sold, granted, conferred or awarded any common or other stock, or any
corporate debt securities which would be classified under generally accepted
accounting principles applied on a consistent basis as long-term debt on the
balance sheets of BTX or any of its subsidiaries; (iii) effected any stock split
or adjusted, combined, reclassified or otherwise changed its capitalization;
(iv) declared, set aside or paid any dividend or other distribution in respect
of its capital stock, or purchased, redeemed, retired, repurchased, or
exchanged, or otherwise acquired or disposed of, directly or indirectly, any of
its capital stock; (v) incurred any material obligation or liability (absolute
or continent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business, or subjected to lien any of its
assets or properties other than in the ordinary course of business consistent
with past practice; (vi) discharged or satisfied any material lien or paid any
material obligation or liability (absolute or contingent), other than in the
ordinary course of business; (vii) sold, assigned, transferred, leased,
exchanged, or otherwise disposed of any of its properties or assets other than
for a fair consideration in the ordinary course of business; (viii) except as
required by contract or law, (A) increased the rate of compensation of, or paid
any bonus to, any of its directors, officers, or other employees, except merit
or promotion increases in accordance with existing policy, (B) entered into any
new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other similar contract, (C)
entered into, terminated or substantially modified any of the Employee Plans, or
(D) agreed to do any of the foregoing; (ix) suffered any material damage,
destruction, or loss, whether as the result of fire, explosion, earthquake,
accident, casualty, labor trouble, requisition, or taking of property by any
regulatory authority, flood, windstorm, embargo, riot, act of God or the enemy,
or other
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casualty or event, and whether or not covered by insurance; (x) canceled or
compromised any debt, except for debts charged off or compromised in accordance
with past practice; (xi) entered into any material transaction, contract or
commitment outside the ordinary course of its business and (xii) made or
guaranteed any loan to any of the Employee Plans.
ARTICLE THREE
REPRESENTATIONS OF FBI
FBI hereby makes the following representations and warranties:
SECTION 3.01. Organization. FBI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Missouri with full
corporate power and authority to carry on its business as it is now being
conducted.
SECTION 3.02. Authorization. Nothing in the articles of incorporation or
bylaws of FBI, as amended, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to it or any of its subsidiaries are bound
or subject would prohibit or inhibit FBI from entering into and consummating
this Agreement and the Stock Purchase on the terms and conditions herein
contained. This Agreement has been duly and validly executed and delivered by
FBI and constitutes a legal, valid and binding obligation of FBI, enforceable
against FBI in accordance with its terms except as may be limited by bankruptcy,
insolvency or similar laws or by general principles of equity and no other
corporate acts or proceedings are required to be taken by FBI to authorize the
execution, delivery and performance of this Agreement except as contemplated
hereby. Except for the requisite approvals of the Federal Reserve Board and the
Texas Department of Banking, no notice to, filing with, authorization by, or
consent or approval of, any federal or state regulatory authority is necessary
for the execution and delivery of this Agreement or consummation of the Stock
Purchase by FBI.
SECTION 3.03. Available Funds. At the Closing Date FBI will have available
cash resources sufficient to pay the Purchase Price.
SECTION 3.04. Financial Information. The audited consolidated balance
sheets of FBI and its subsidiaries as of December 31, 1993 and 1992 and related
consolidated income statements and statements of changes in shareholders' equity
and of cash flows for the three years ended December 31, 1993, together with the
notes thereto, included in FBI's Annual Report on Form 10-K for the year ended
December 31, 1993, as currently on file with the S.E.C., and the unaudited
consolidated balance sheets of FBI and its subsidiaries as of March 31, 1994 and
the related unaudited consolidated income statements and statements of changes
in shareholders' equity and cash flows for the three months then ended included
in FBI's Quarterly Report on Form 10-Q for the quarter then ended, as currently
on file with the S.E.C. (together, the "FBI Financial Statements"), have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be disclosed therein) and fairly present the
consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of FBI and its consolidated
subsidiaries as of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end adjustments, none
of which will be material).
SECTION 3.05. Absence of Changes. Since December 31, 1993, there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of FBI and its subsidiaries taken as a
whole, nor have there been any events or transactions having such a material
adverse effect which should be disclosed in order to make the FBI Financial
Statements not misleading.
SECTION 3.06. Litigation. There is no litigation, claim or other proceeding
pending, or, to the knowledge of FBI, threatened, against FBI or any of its
subsidiaries which would prevent FBI from consummating the Stock Purchase.
SECTION 3.07. Compliance with Law. FBI and its subsidiaries have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective
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businesses in all material respects and are in compliance in all material
respects with all applicable laws and regulations.
SECTION 3.08. Statements True and Correct. None of the information supplied
or to be supplied by FBI for inclusion in (i) the Proxy Statement; and (iii) any
other documents to be filed with the S.E.C. or any banking or other regulatory
authority in connection with the transactions contemplated hereby, will, at the
respective times such documents are filed, and, in the case of the Proxy
Statement, when first mailed to the stockholders of BTX, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading, or, in the case of the
Proxy Statement or any amendment thereof or supplement thereto, at the time of
the Stockholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Stockholders' Meeting. All documents that FBI is responsible for filing with the
S.E.C. or any other regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law and the applicable rules and regulations
thereunder.
SECTION 3.09. No Defaults. FBI and its subsidiaries are neither in default
under nor in violation of any provision of their articles or certificates of
incorporation, bylaws, or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or other commitment
or any other agreement which is material to FBI and its subsidiaries taken as a
whole.
SECTION 3.10. Regulatory Enforcement Matters. Neither FBI nor any of its
subsidiaries is subject to, or has received any notice or advice that it may
become subject to, any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits or any other governmental
agency having supervisory or regulatory authority with respect to FBI or any of
its subsidiaries.
SECTION 3.11. Brokerage. Except for fees payable by FBI to Stifel Nicolaus
& Co., there are no existing claims or agreements for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by FBI or its subsidiaries.
SECTION 3.12. Investment Intention; Accreditation. FBI is acquiring the
shares of Class B Common Stock pursuant to this Agreement for its own account
and without any view to a distribution thereof. FBI further represents and
warrants to BTX that it is an "accredited investor" within the meaning of
Regulation D under the Securities Act of 1933, as amended. FBI has been afforded
an adequate opportunity to meet with and question the management of BTX and has
obtained the information it has requested.
ARTICLE FOUR
PRE-CLOSING AGREEMENTS OF BTX
SECTION 4.01. Business in Ordinary Course.
(a) BTX shall not declare or pay any dividend or make any other
distribution to stockholders, whether in cash, stock or other property, after
the date of this Agreement and prior to the Closing.
(b) Except as contemplated hereby, BTX shall, and shall cause each of its
subsidiaries to, continue to carry on after the date hereof and through the
Closing Date its respective business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted, and by way of amplification and not
limitation, BTX and each of its subsidiaries will not, without the prior written
consent of FBI (which shall not be unreasonably withheld):
(i) issue any Common Stock or other capital stock or any options,
warrants, or other rights to subscribe for or purchase Common Stock or any
other capital stock or any securities convertible into or exchangeable for
any capital stock (except for the issuance of Common Stock pursuant to the
exercise of BTX Stock Options, to purchase the same which are outstanding
on the date of this Agreement or
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pursuant to the Warrant Agreement or pursuant to the F.D.I.C. Warrants and
the Lender Warrants to the extent of the exercise thereof after the
date hereof); or
(ii) directly or indirectly redeem, purchase or otherwise acquire any
Common Stock or any other capital stock of BTX or its subsidiaries; or
(iii) effect a reclassification, recapitalization, splitup, exchange
of shares, readjustment or other similar change in or to any capital stock
or otherwise reorganize or recapitalize; or
(iv) change its certificate of incorporation or association, as the
case may be, or bylaws; or
(v) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to become
payable to officers or salaried employees, grant any stock options or,
except as required by law, adopt or make any change in any bonus,
insurance, pension, or other Employee Plan, agreement, payment or
arrangement made to, for or with any of such officers or employees; or
(vi) borrow or agree to borrow any amount of funds except in the
ordinary course of business, or directly or indirectly guarantee or agree
to guarantee any obligations of others (for the purpose hereof, it is
understood and agreed that the incurrence of obligations under repurchase
agreements shall be considered as transactions in the ordinary course of
business); or
(vii) make or commit to make any new loan or letter of credit or any
new or additional discretionary advance under any existing line of credit,
in principal amounts in excess of Two Million Five Hundred Thousand Dollars
($2,500,000) or that would increase the aggregate credit outstanding to any
one borrower (or group of affiliated borrowers) to more than Two Million
Five Hundred Thousand Dollars ($2,500,000) (excluding for this purpose any
accrued interest or overdrafts), without the prior written consent of FBI,
acting through Allen H. Blake or such other designee as FBI may give notice
of to BTX; or
(viii) purchase or otherwise acquire any investment security for its
own account having an average remaining life to maturity greater than five
years, any asset-backed securities other than those issued or guaranteed by
the Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation having an
expected average life to maturity of greater than five years or any
interest only, principal only, residual or stripped securities; or
(ix) enter into any agreement, contract or commitment out of the
ordinary course of business or having a term in excess of three (3) months
other than letters of credit, loan agreements, deposit agreements, and
other lending, credit and deposit agreements and documents made in the
ordinary course of business; or
(x) except in the ordinary course of business (which includes pledges
of securities in connection with public funds deposits and pledges of
securities to dealers and/or the Federal Home Loan Bank of Dallas), place
on any of its assets or properties any mortgage, pledge, lien, charge, or
other encumbrance; or
(xi) except in the ordinary course of business, cancel or accelerate
any indebtedness of more than $100,000 owing to BTX or its subsidiaries or
any claims which BTX or its subsidiaries may possess or waive any material
rights of substantial value; or
(xii) sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property other than (A)
properties acquired in foreclosure or otherwise in the ordinary collection
of indebtedness to BTX and its subsidiaries or (B) sales of pools of loans
in accordance with past practices; or
(xiii) purchase, foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining a phase
one environmental report thereon which indicates that the property is free
of pollutants, contaminants or hazardous or toxic waste materials;
provided, however, that BTX and its subsidiaries shall not be required to
obtain such a report with respect to single family, non-agricultural
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residential property of one acre or less to be foreclosed upon unless it
has reason to believe that such property might contain any such waste
materials or otherwise might be contaminated; or
(xiv) commit any act or fail to do any act which will cause a breach
of any agreement, contract or commitment and which will have a material
adverse effect on BTX's and its subsidiaries' business, financial
condition, or earnings; or
(xvii) knowingly violate any law, statute, rule, governmental
regulation, or order, which violation might have a material adverse effect
on BTX's and its subsidiaries' business, financial condition, or earnings;
or
(xviii) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed therefor is in
excess of Three Hundred Thousand Dollars ($300,000).
(c) BTX and its subsidiaries shall not, without the prior written consent
of FBI, engage in any transaction or take any action that would render untrue in
any material respect any of the representations and warranties of BTX contained
in Article Two hereof, if such representations and warranties were given as of
the date of such transaction or action.
(d) BTX shall promptly notify FBI, making reference to this section, of the
occurrence of any matter or event known to and directly involving BTX, which
would not include any changes in conditions that affect the banking industry
generally in the markets in which BTX and its subsidiaries operate, that is
materially adverse to the business, operations, properties, assets, or condition
(financial or otherwise) of BTX and its subsidiaries taken as a whole.
(e) BTX shall promptly advise FBI of its receipt of any proposal (or
inquiry concerning any possible such proposal) regarding an acquisition of all
or any substantial portion of the business, assets or stock of BTX and its
subsidiaries and, subject to the fulfillment of the fiduciary duties of the
Board of Directors of BTX, the substance of such proposal or inquiry.
SECTION 4.02. Breaches. BTX shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to FBI and use its best efforts to prevent or promptly
remedy the same.
SECTION 4.03. Submission to Stockholders and Related Matters.
(a) BTX shall, prior to the Closing, take all actions necessary to amend
and restate its Restated Certificate of Incorporation to read in its entirety as
set forth on Exhibit 4.03(a) attached hereto (as amended and restated, the "BTX
Restated Certificate of Incorporation").
(b) BTX shall, prior to the Closing, take all actions necessary to amend
and restate its Bylaws to read in its entirety as set forth on Exhibit 4.03(b)
attached hereto (as amended and restated, the "BTX Restated Bylaws"; the BTX
Restated Certificate of Incorporation and the BTX Restated Bylaws are referred
to herein collectively as the "Amendments").
(c) BTX shall cause to be duly called and held, on the earliest practicable
date selected by BTX, a meeting of its stockholders (such meeting together with
any adjournments thereof referred to as "Stockholders' Meeting") for submission
and approval of the transactions contemplated by this Agreement and the BTX
Restated Certificate of Incorporation of such stockholders as required by the
Delaware General Corporation Law and Restated Certificate of Incorporation of
BTX.
(d) In connection with the Stockholders' Meeting, (i) BTX shall prepare and
file, at its sole cost and expense, a Proxy Statement (the "Proxy Statement")
with the S.E.C. and the N.Y.S.E. and BTX shall mail it to its stockholders; and
(ii) the Board of Directors of BTX, subject to the fulfillment of their
fiduciary duties, shall unanimously recommend to its stockholders the approval
of the transactions contemplated by this Agreement, and the Amendments
contemplated hereby and use its best efforts to obtain such stockholder
approval.
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(e) BTX shall promptly and properly prepare and file any other filings
required under the Exchange Act relating to this Agreement, the Stock Purchase
and the Amendments and the transactions contemplated herein and therein. Except
as contemplated by Section 6.03 hereof, BTX shall have no obligation to register
the issuance or sale of the Class B Common Stock under the Securities Act of
1933, as amended (the "Securities Act").
SECTION 4.04. Consummation of Agreement. Subject to the fulfillment of the
fiduciary duties of the board of directors of BTX, BTX shall use its best
efforts to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Stock Purchase and
the other transactions contemplated hereby in accordance with the terms and
provisions hereof. BTX shall furnish to FBI in a timely manner all information,
data and documents in the possession of BTX requested by FBI as may be required
to obtain any necessary regulatory or other approvals of the Stock Purchase and
shall otherwise cooperate fully with FBI to carry out the purpose and intent of
this Agreement.
SECTION 4.05. Environmental Reports. BTX shall provide to FBI, as soon as
reasonably practical, but not later than ten (10) days after the date hereof, a
list of all real property owned, leased or operated by BTX or its subsidiaries
or in which any of them acts or has the power to act in a fiduciary capacity as
of the date hereof (other than space in retail and similar establishments leased
by the BTX for automatic teller machines) (the "Property List") and within ten
(10) days after the acquisition, lease or operation of any real property
acquired, leased or operated by BTX or its subsidiaries on their own behalf or
in a fiduciary capacity after the date hereof (other than space in retail and
similar establishments leased or operated by the BTX for automatic teller
machines), BTX shall notify FBI that such property has been acquired or leased
or that the BTX or its subsidiaries have begun to operate such property. BTX has
made available and will continue to make available to FBI all of the information
in BTX's possession regarding the environmental condition of every property on
the Property List. FBI shall, within ten (10) days after its receipt of the
Property List, notify BTX if FBI believes that it is necessary and appropriate
to obtain any environmental report or other environmental information concerning
any property identified on the Property List. If FBI notifies BTX of its desire
to obtain additional information or reports with respect to any property, then
FBI and BTX shall cooperate in jointly determining the course of action to be
taken, including the nature of any report to be obtained and the appropriate
method of sharing the costs of obtaining such report. In the event that the
parties are unable to agree BTX shall take any necessary steps to enable FBI to
obtain any environmental report it elects to obtain, and BTX and FBI shall share
equally the costs and expenses thereof.
SECTION 4.06. Access to Information. BTX shall permit FBI reasonable access
in a manner which will avoid undue disruption or interference with BTX's normal
operations to its properties and shall disclose and make available to FBI all
books, documents, papers and records relating to its assets, stock ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger), tax records, minute
books of directors' and stockholders' meetings, organizational documents,
material contracts and agreements, loan files, filings with any regulatory
authority, accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files, plans affecting employees,
and any other business activities or prospects in which FBI may have a
reasonable and legitimate interest in furtherance of the transactions
contemplated by this Agreement. BTX shall deliver to FBI within ten (10) days
after the date hereof a true, accurate and complete copy of each written plan or
program disclosed in Section 2.13(c) of the Disclosure Schedule and, with
respect to each such plan or program, all (i) amendments or supplements thereto;
(ii) summary plan descriptions; (iii) lists of all current participants and all
participants with benefit entitlements; (iv) contracts relating to plan
documents; (v) actuarial valuations for any defined benefit plan; (vi)
valuations for any plan as of the most recent date; (vii) determination letters
from the Internal Revenue Service; (viii) the most recent annual report filed
with the Internal Revenue Service; (ix) registration statements on Form S-8 and
prospectuses; and (x) trust agreements. FBI will hold any such information which
is nonpublic in confidence in accordance with the provisions of Section 10.01
hereof.
SECTION 4.07. Consents and Notices. BTX shall obtain all necessary consents
and provide all necessary notices with respect to all interests of BTX and its
subsidiaries in any material leases, licenses, contracts, instruments and rights
which require the consent of, or notice to, another person as a result of the
Stock
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Purchase or the other transactions contemplated hereby, including, without
limitation, if required, notice to the F.D.I.C. under Section 12 of the F.D.I.C.
Warrant.
ARTICLE FIVE
PRE-CLOSING AGREEMENTS OF FBI
SECTION 5.01. Regulatory Approvals. FBI shall file all regulatory
applications required in order to consummate the Stock Purchase, including but
not limited to the necessary applications for the prior approval of the Federal
Reserve Board and the Texas Department of Banking. FBI shall keep BTX reasonably
informed as to the status of such applications and make available to BTX, upon
reasonable request by BTX from time to time, copies of such applications and any
supplementally filed materials.
SECTION 5.02. Breaches. FBI shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to BTX and use its best efforts to prevent or promptly
remedy the same.
SECTION 5.03. Consummation of Agreement. FBI shall use its best efforts to
perform and fulfill all conditions and obligations on its part to be performed
or fulfilled under this Agreement and to effect the Stock Purchase in accordance
with the terms and conditions of this Agreement.
ARTICLE SIX
POST-CLOSING OPERATING AGREEMENTS
SECTION 6.01. Board of Director Representation. After the Closing on the
Closing Date, BTX shall cause to be held a special meeting of its Board of
Directors (the "Special Directors Meeting"). At the Special Directors Meeting,
all but three of the then-serving directors of BTX shall resign and such
remaining three then-serving directors of BTX (two of whom shall be outside
directors as determined under the rules of the N.Y.S.E.) shall accept such
resignations and take appropriate action to fill three of the then-existing
vacancies on the BTX Board of Directors with the following affiliates of FBI:
James F. Dierberg, Allen H. Blake and Mark Turkcan, each of whom shall be
appointed to serve until the next annual meeting of BTX stockholders.
SECTION 6.02. Anti-dilution.
(a) After the Closing and during the period of ninety (90) months after the
Closing Date, BTX shall not issue any shares of Common Stock, Class B Common
Stock, voting preferred stock or any other voting security (collectively
referred to herein as "Voting Stock"), or grant any option, warrant, call or
other right to subscribe for or acquire Voting Stock or enter into any agreement
providing for any such issuance or grant, if upon the issuance of such Voting
Stock the FBI Shares (as defined in Section 6.02(b)(i) hereof) would constitute
less than fifty-five percent (55%) of the total outstanding shares of
Fully-Diluted Voting Stock (as defined in Section 6.02(b)(ii) hereof); provided,
however, that, notwithstanding the foregoing, BTX may issue additional shares of
Voting Stock or grant an option, warrant, call or other right to subscribe for
or acquire Voting Stock or enter into an agreement providing for such issuance
or grant as aforesaid if, at such time, BTX also grants to FBI an option or
warrant to acquire, at any time during the twelve (12) month period commencing
upon the issuance by BTX of such additional Voting Stock, shares of Common Stock
or Class B Common Stock in an amount sufficient to cause the total number of FBI
Shares to equal fifty-five percent (55%) of the total outstanding shares of
Fully-Diluted Voting Stock at such time, with such option or warrant providing
for an exercise price per share (the "Exercise Price") of an amount equal to (i)
if such option or warrant is granted by BTX to FBI during the period of sixty
(60) months after the Closing Date, one hundred six and two-thirds percent
(106.67%) of the tangible common equity per share (as defined in Section
6.02(b)(iii) hereof), on a primary basis as of the end of the preceding quarter,
as adjusted to give effect to the issuance by BTX of such additional Voting
Stock (the "Adjusted Quarter-End Equity"), or (ii) if such option or warrant is
granted by BTX to FBI during the sixty-first (61st) through the seventy-second
(72nd)
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months of the aforesaid ninety (90) month period after the Closing Date, one
hundred thirteen percent (113%) of the Adjusted Quarter-End Equity, or (iii) if
such option is granted by BTX to FBI during the seventy-third (73rd) month
through the end of the aforesaid ninety (90) month period after the Closing
Date, one hundred twenty percent (120%) of the Adjusted Quarter-End Equity;
provided, further, however, that the Exercise Price determined pursuant to
clause (ii) or (iii) above shall not exceed, and shall be limited to, the
average closing price of a share of BTX Common Stock on the N.Y.S.E. (or the
American Stock Exchange or the NASDAQ National Market System, as the case may be
at such time) during the sixty (60) day trading period ending on the last
trading day immediately preceding the grant of such warrant or option by BTX to
FBI.
(b) As used herein, the term (i) "FBI Shares" shall mean and include the
sum of (A) the number of shares of Common Stock, Class B Common Stock or other
Voting Stock then held by FBI, (B) the number of shares of Common Stock, Class B
Common Stock or other Voting Stock issuable to FBI pursuant to an option or
warrant granted by BTX to FBI upon the exercise thereof, plus (C) the number of
shares of Common Stock, Class B Common Stock or other Voting Stock sold by FBI
at any time; (ii) "Fully-Diluted Voting Stock" shall mean, at any time, the then
outstanding shares of Common Stock, voting preferred stock (with a share of such
stock having multiple votes per share being deemed to be that number of shares
as equals its number of votes) plus (without duplication) all shares of Common
Stock or voting preferred stock issuable, whether at such time or upon the
passage of time or the occurrence of future events, upon the exercise,
conversion, or exchange of all then outstanding rights, warrants, options,
convertible securities (including the Class B Common Stock) or indebtedness,
exchangeable securities or indebtedness, or other rights, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Stock or voting
preferred stock and securities convertible or exchangeable into Common Stock or
voting preferred stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event; and (iii) "tangible common equity
per share" shall mean the quotient of (A) the total amount of stockholders'
equity of BTX determined in accordance with generally accepted accounting
principles, less the amount of any preferred stock outstanding and less
intangible assets resulting from acquisitions accounted for as purchases (which
shall include in all cases the total of the excess of cost over net assets
acquired of each purchased subsidiary), divided by (B) the total number of
shares of Common Stock and Class B Common Stock outstanding.
SECTION 6.03. Registration Rights.
(a) If at any time after the fifth (5th) anniversary of the Closing Date,
BTX shall receive a written request therefor from FBI, BTX shall prepare and
file with the S.E.C. a registration statement complying with the Securities Act
covering all or a portion of any shares of Common Stock issued to FBI upon
conversion of the Class B Common Stock as FBI shall specify in the request and
shall use its best efforts to cause such registration statement to become
effective; provided, however, that FBI shall only have the right to request
three such registrations. Without the written consent of FBI, neither BTX nor
any other holder of securities of BTX may include in such registrations any BTX
securities other than such specified number of shares of Class B Common Stock
(or shares of Common Stock issued to FBI upon conversion of the Class B Common
Stock).
(b) On or after the fifth (5th) anniversary of the Closing Date, each time
BTX shall determine to proceed with the actual preparation and filing of a
registration statement in connection with the proposed offer and sale for cash
of any of its securities (other than in connection with a dividend reinvestment,
employee stock purchase, stock option or similar plan or an offering in
connection with an acquisition of a business) by it or any of its stockholders,
BTX will give written notice of its determination to FBI. Upon the written
request of FBI given within ten (10) business days after receipt of any such
notice from BTX, BTX will, except as herein provided, cause to be included in
such registration all shares of Common Stock issued to FBI upon conversion of
any Class B Common Stock which FBI shall request; provided, however, that
nothing herein shall prevent BTX from, at any time, abandoning or delaying any
registration. If any offering pursuant to this Section 6.03(b) shall be
underwritten in whole or in part, BTX may require that shares of Common Stock
issued to FBI upon conversion of the Class B Common Stock) requested for
inclusion pursuant to this Section 6.03(b) be included in the underwriting on
the same terms and conditions as the securities otherwise being sold through the
underwriters. In the event that the shares of Common Stock issued to FBI upon
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conversion of the Class B Common Stock) requested for inclusion pursuant to this
Section 6.03(b) would constitute more than thirty percent (30%) of the total
number of shares to be included in a proposed underwritten public offering, and
if in the good faith judgment of the managing underwriter of such public
offering (the "Underwriter") the inclusion of all of such shares of Common Stock
issued to FBI upon conversion of the Class B Common Stock would interfere with
the successful marketing of the shares of stock offered by BTX, the number of
shares of Common Stock issued to FBI upon conversion of the Class B Common Stock
otherwise to be included in the underwritten public offering may be reduced;
provided, however, that after any such required reduction the shares of Common
Stock issued to FBI upon conversion of the Class B Common Stock to be included
in such offering for the account of FBI shall constitute at least fifteen
percent (15%) of the total number of shares to be included in such offering.
(c) If and whenever BTX is required by the provisions of Sections 6.03(a)
or (b) hereof to effect on behalf of FBI a public offering of any shares of
Common Stock issued to FBI upon conversion of the Class B Common Stock under the
Securities Act, BTX shall: (i) prepare and file with the S.E.C. a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to exceed
six (6) months; (ii) prepare and file with the S.E.C. such amendments to such
registration statement and supplements thereto as may be necessary to keep such
registration statement effective for such period as may be reasonably necessary
to effect the sale of such securities, not to exceed six (6) months; (iii)
furnish to FBI and to any underwriters of the securities being registered such
reasonable number of copies of the prospectus (preliminary or final, as
appropriate) contained in such registration statement and such other documents
as FBI or such underwriters may reasonably request in order to facilitate the
public offering of such securities; (iv) use its best efforts to register or
qualify the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as FBI or such underwriters
may reasonably request; provided that BTX shall not be required by virtue hereof
to submit to general jurisdiction in any state; (v) notify FBI, promptly after
BTX shall receive notice thereof, of the time when such registration statement
has become effective or a supplement thereto has been filed; (vi) notify FBI
promptly of any comments or requests by the S.E.C. relating to such registration
statement; (vii) prepare and file with the S.E.C., promptly upon the request of
FBI, any amendments or supplements to such registration statement which, in the
opinion of counsel for FBI, is required under the Securities Act or the rules or
regulations thereunder in connection with the distribution of the Shares by FBI;
(viii) prepare and promptly file with the S.E.C. such amendment or supplement to
such registration statement (or included prospectus) as may be necessary to
correct any statements or omissions if, at the time when such prospectus is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which such prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading; (ix) advise FBI, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
S.E.C. suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; and (x) at the request of FBI,
furnish on the date or dates provided for in any underwriting agreement: (1) an
opinion or opinions of the counsel representing BTX for the purposes of such
registration, addressed to the underwriters and to FBI, covering such matters as
such underwriters and FBI may reasonably request and are customarily covered by
BTX's counsel at that time; and (2) a letter or letters from the independent
certified public accountants of BTX, addressed to the underwriters and to FBI
covering such matters as such underwriters of FBI may reasonably request, in
which letters such accountants shall state (without limiting the generality of
the foregoing) that they are independent certified public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements and other financial data of BTX included in the
registration statement and included prospectus, as amended or supplemented,
comply in all material respects with the applicable accounting requirements of
the S.E.C.
(d) With respect to the offering requested pursuant to Section 6.03(a)
hereof and with respect to each inclusion of shares of Common Stock issued to
FBI upon conversion of the Class B Common Stock in a registration statement
pursuant to Section 6.03(b) hereof and subject to the last clause of the second
sentence
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of Section 6.03(b), BTX shall bear its relative costs and expenses and FBI shall
bear its relative costs and expenses based upon the relative amount of shares
sold by each party, for the following fees, costs and expenses: all registration
and filing fees, printing expenses, fees and disbursements of counsel and
accountants for BTX, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if BTX and/or FBI are required to bear such
fees and disbursements), and all legal fees and disbursements and other expenses
of complying with state securities or blue sky laws of any jurisdictions in
which the securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for FBI, underwriting discounts and
commissions and transfer taxes exclusively for FBI and any other expenses
incurred by FBI not expressly included above shall be borne by FBI.
(e) In the event of any registered offering of shares pursuant to Sections
6.03(a) or (b) hereof, BTX, any underwriter and FBI shall agree to
indemnification and contribution rights and obligations as are customary or as
may be required by the underwriter.
SECTION 6.04. Restrictions on Transfer. FBI shall not sell, assign or
transfer any shares of Class B Common prior to the fifth (5th) anniversary of
the Closing Date, except (i) to direct or indirect subsidiaries of FBI, or (ii)
to entities under common control with FBI, provided that the shares sold or
transferred to such entities shall not exceed, in the aggregate, 24.99% of the
outstanding Voting Stock, or (iii) with the prior written approval of BTX,
acting for this purpose through a committee of the Board of Directors of BTX
consisting entirely of directors who are not also directors, officers or
employees of FBI or any of its subsidiaries (excluding BTX and its subsidiaries
as subsidiaries of FBI for this purpose). The certificates for the shares of
Class B Common issued to FBI shall contain an appropriate legend disclosing the
restriction on transfer contemplated by this Section 6.04.
ARTICLE SEVEN
CONDITIONS PRECEDENT TO STOCK PURCHASE
SECTION 7.01. Conditions to FBI's Obligations. FBI's obligations to effect
the Stock Purchase and the other transactions contemplated by this Agreement
shall be subject to the satisfaction (or waiver by FBI) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by BTX in this Agreement
shall be true in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made
or given on and as of the Closing Date;
(b) BTX shall have performed and complied in all material respects
with all of its obligations and agreements required to be performed prior
to the Closing Date under this Agreement;
(c) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency (including any
bank regulatory authority) of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction
(preliminary or permanent), temporary restraining order, judgment, order,
decree, or charge would (i) prevent, prohibit or inhibit consummation of
any of the transactions contemplated by this Agreement; (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation; (iii) adversely affect the right of FBI to own the Class B
Common Stock; (iv) affect adversely the right of any of BTX and its
subsidiaries to own its assets and operate its businesses; (v) cause the
Common Stock of BTX to cease being listed on the N.Y.S.E. (unless BTX
causes the Common Stock to be listed on the American Stock Exchange or to
be eligible for trading in the NASDAQ National Market System); (vi) hold
any one or more of the directors of BTX liable for a breach of their
fiduciary duties in connection with this Agreement or any of the
transactions contemplated hereby; or (vii) adversely affect the financial
condition, the results of operations or the business or prospects of BTX
and its subsidiaries taken as a whole (and no such injunction (preliminary
or permanent), temporary restraining order, judgment, order, decree, or
charge shall be in effect). For purposes of the preceding sentence, FBI and
BTX agree that a pending or threatened action, suit or proceeding shall not
be deemed to satisfy the standard set forth therein unless FBI in the
exercise of reasonable judgment determines, after consultation with BTX and
17
<PAGE> 55
BTX's counsel, that such action, suit or proceeding has a significant
prospect of resulting in one or more of the unfavorable outcomes
enumerated in such sentence. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Stock Purchase which makes the consummation of the Stock
Purchase or the other transactions contemplated hereby illegal;
(d) All necessary regulatory approvals, consents, authorizations and
other approvals, including the requisite approval of this Agreement, the
Stock Purchase and the Amendments by the stockholders of BTX required by
law for consummation of the Stock Purchase and the other transactions
contemplated hereby shall have been obtained and all waiting periods
required by law shall have expired;
(e) FBI shall have received all documents required to be received from
BTX on or prior to the Closing Date, all in form and substance reasonably
satisfactory to FBI;
(f) The FDIC Warrants shall not be adjusted on account of the
transactions contemplated by this Agreement to represent the right to
purchase more than 1,970,033 shares of BTX Common Stock; and
(g) BTX shall have received an opinion, dated as of or shortly prior
to the date of mailing of the Proxy Statement to the stockholders of BTX
for the Stockholders' Meeting, of its investment banking firm, McKenna and
Company, to the effect that the transaction contemplated by this Agreement,
considered as a whole, is fair from a financial point of view to BTX and
its stockholders.
SECTION 7.02. Conditions to BTX's Obligations. BTX's obligation to effect
the Stock Purchase and the other transactions contemplated by this Agreement
shall be subject to the satisfaction (or waiver by BTX) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by FBI in this Agreement
shall be true in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made
or given on the Closing Date;
(b) FBI shall have performed and complied in all material respects
with all of its obligations and agreements hereunder required to be
performed prior to the Closing Date under this Agreement;
(c) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency (including any
bank regulatory authority) of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction
(preliminary or permanent), temporary restraining order, judgment, order,
decree, or charge would prevent, prohibit or inhibit consummation of any of
the transactions contemplated by this Agreement. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Stock Purchase which makes the
consummation of the Stock Purchase or the other transactions contemplated
hereby illegal;
(d) All necessary regulatory approvals, consents, authorizations and
other approvals (including the requisite approval of this Agreement, the
Stock Purchase and the Amendments by the stockholders of BTX) required by
law for consummation of the Stock Purchase and the other transactions
contemplated hereby shall have been obtained and all waiting periods
required by law shall have expired;
(e) BTX shall have received all documents required to be received from
FBI on or prior to the Closing Date, all in form and substance reasonably
satisfactory to BTX; and
(f) BTX shall have received an opinion, dated as of or shortly prior
to the date of mailing of the Proxy Statement to the stockholders of BTX
for the Stockholders' Meeting, of its investment banking firm, McKenna and
Company, to the effect that the transaction contemplated by this Agreement,
considered as a whole, is fair from a financial point of view to BTX and
its stockholders.
18
<PAGE> 56
ARTICLE EIGHT
TERMINATION OR ABANDONMENT
SECTION 8.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether stockholder approval of this Agreement, the Stock Purchase
and the Amendments by the stockholders of BTX shall have been previously
obtained.
SECTION 8.02. Breach of Agreements. In the event that there is a material
breach in any of the representations and warranties or agreements of FBI or BTX,
which breach is not cured within thirty (30) days after notice to cure such
breach is given to the breaching party by the non-breaching party, then the non-
breaching party, regardless of whether stockholder approval of this Agreement,
the Stock Purchase and the Amendments shall have been previously obtained, may
terminate and cancel this Agreement by providing written notice of such action
to the other party hereto.
SECTION 8.03. Failure of Conditions. In the event that any of the
conditions to the obligations of either party are not satisfied or waived on or
prior to the Closing Date, and if any applicable cure period provided in Section
8.02 hereof has lapsed, then such party may, regardless of whether stockholder
approval of the transactions contemplated by this Agreement and the Amendments
shall have been previously obtained, terminate and cancel this Agreement by
delivery of written notice of such action to the other party on such date.
SECTION 8.04. Approval Denial. If any regulatory application filed pursuant
to Section 5.01 hereof should be finally denied or disapproved by the respective
regulatory authority, then this Agreement thereupon shall be deemed terminated
and canceled; provided, however, that a request for additional information or
undertaking by FBI, as a condition for approval, shall not be deemed to be a
denial or disapproval so long as FBI diligently provides the requested
information or undertaking. In the event an application is denied pending an
appeal, petition for review, or similar such act on the part of FBI (hereinafter
referred to as the "appeal") then the application will be deemed denied unless
FBI prepares and timely files such appeal and continues the appellate process
for purposes of obtaining the necessary approval.
SECTION 8.05. Shareholder Approval Denial. If the transactions contemplated
by this Agreement and the Amendments are not approved by the requisite vote of
the stockholders of BTX at the Stockholders' Meeting, then either party may
terminate this Agreement.
SECTION 8.06. Regulatory Enforcement Matters. In the event that BTX or any
of its subsidiaries shall become a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist order,
imposition of civil money penalties or other regulatory enforcement action or
proceeding with any federal or state agency charged with the supervision or
regulation of banks or bank holding companies after the date of this Agreement,
then FBI may terminate this Agreement.
SECTION 8.07. Automatic Termination. If the Closing Date does not occur on
or prior to February 28, 1995, then this Agreement may be terminated by either
party by giving written notice to the other.
ARTICLE NINE
CERTAIN PAYMENTS UPON TERMINATION OR ABANDONMENT
SECTION 9.01. Liabilities Upon Termination of Agreement. In the event that
this Agreement is terminated or the Stock Purchase is abandoned pursuant to the
provisions of Article Eight hereof, no party hereto shall have any liability to
any other party for costs, expenses, damages or otherwise; provided, however,
that, notwithstanding the foregoing, in the event that this Agreement is
terminated by BTX or FBI pursuant to Section 8.02 hereof, on account of a
knowing and material breach in any of the representations and warranties or any
material breach of any of the agreements of the other party hereto, then the
non-breaching party shall be entitled to institute an action for appropriate
damages against such breaching party.
19
<PAGE> 57
SECTION 9.02. Payment Upon Occurrence of Triggering Event.
(a) Upon the occurrence of a Triggering Event (as defined in Section
9.02(b) hereof), BTX shall upon request of FBI pay to FBI the sum of One Million
Five Hundred Thousand Dollars ($1,500,000.00) in cash as full liquidated damages
hereunder to FBI for such event.
(b) As used herein, the term "Triggering Event" shall mean the consummation
of any transaction announced before or within nine (9) months after the
termination of this Agreement (the "Termination Date") and consummated within
twenty-one (21) months after the Termination Date, whereby a third party has
acquired, merged or consolidated with BTX, purchased all or substantially all of
BTX's assets or directly or indirectly acquired beneficial ownership of
twenty-five percent (25%) or more of the outstanding shares of voting stock of
BTX.
ARTICLE TEN
GENERAL
SECTION 10.01. Confidential Information. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein described)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential, unless such
information becomes subject to a legal obligation of disclosure. Such
Information will include any and all financial, technical, commercial,
marketing, customer or other information concerning the business, operations and
affairs of a party that may be provided to the other, irrespective of the form
of the communications, by such party's employees or agents. Such Information
shall not include information which is or becomes generally available to the
public other than as a result of a disclosure by a party or its representatives
in violation of this Agreement. The parties agree that the Information will be
used solely for the purposes contemplated by this Agreement and that such
Information will not be disclosed to any person other than employees and agents
of a party who are directly involved in evaluating the transaction. The
Information shall not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the other party's business or any
business or enterprise in which such party may have an interest, now or in the
future, and whether or not now in competition with such other party.
SECTION 10.02. Publicity. FBI and BTX shall cooperate with each other in
the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Stock Purchase. Neither party
shall issue any news release or make any other public disclosure without the
prior consent of the other party, unless such is required by law upon the
written advice of counsel or is in response to published newspaper or other mass
media reports regarding the transaction contemplated hereby, in which such
latter event the parties shall consult with each other to the extent practicable
regarding such responsive public disclosure, or unless the circumstances require
that a party make a public disclosure and such party, in good faith, despite
reasonable efforts is unable to obtain the consent of the other.
SECTION 10.03. Return of Documents. Upon termination of this Agreement
without the Stock Purchase becoming effective, each party shall deliver to the
other originals and all copies of all Information made available to such party
and will not retain any copies, extracts or other reproductions in whole or in
part of such Information.
20
<PAGE> 58
SECTION 10.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to FBI:
First Banks, Inc.
135 North Meramec Ave.
Clayton, Missouri 63105
Attention: Mr. James F. Dierberg
Facsimile: (314) 854-5454
with a copy to:
Lewis, Rice & Fingersh
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: Thomas C. Erb, Esq.
Facsimile: (314) 241-6056
and
(b) if to BTX:
BancTexas Group, Inc.
13747 Montfort Drive, Suite 300
Dallas, Texas 75240
Attention: Nathan C. Collins
Facsimile: (214) 701-4790
with copies to:
John S. Daniels, Attorney at Law
222 West Las Colinas Blvd., Suite 2025
Irving, Texas 75039
Facsimile: (214) 432-9101
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 10.05. Nonsurvival of Representations, Warranties and Agreements.
Except for and as provided in this Section 10.05, no representation, warranty or
agreement contained in this Agreement shall survive the Closing Date or the
earlier termination of this Agreement. The agreements set forth in Sections
6.01, 6.02 and 6.03 shall survive the Closing Date and the agreements set forth
in Sections 9.01, 9.02, 10.01, 10.03 and 10.06 shall survive the Closing Date or
the earlier termination of this Agreement.
SECTION 10.06. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
SECTION 10.07. Entire Agreement. This Agreement and the Warrant Agreement
constitute the entire agreement between the parties and supersedes and cancels
any and all prior discussions, negotiations, undertakings, agreements in
principle and other agreements between the parties relating to the subject
matter hereof.
SECTION 10.08. Headings and Captions. The captions of Articles and Sections
hereof are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
21
<PAGE> 59
SECTION 10.09. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by notice to the other party
waiving such condition. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. This Agreement not be amended or modified except
by a written document duly executed by the parties hereto.
SECTION 10.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
SECTION 10.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
SECTION 10.12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. There shall be no third party beneficiaries hereof.
SECTION 10.13. Governing Law; Assignment. This Agreement shall be governed
by the laws of the State of Texas (except to the extent that the Delaware
General Corporation Law governs transactions involving BancTexas Group, Inc. by
virtue of its status as a Delaware corporation) and applicable federal laws and
regulations. This Agreement may not be assigned by either of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FIRST BANKS, INC.
By /s/ JAMES F. DIERBERG
James F. Dierberg
Chairman
BANCTEXAS GROUP INC.
By: /s/ NATHAN C. COLLINS
Nathan C. Collins
Chairman, President and
Chief Executive Officer
22
<PAGE> 60
EXHIBIT 1.04(A)
BTX LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of BTX under
the laws of the State of Delaware, its power and authority to own and operate
its properties and to carry on its business as now conducted, and its power and
authority to enter into the Agreement, to consummate the Stock Purchase in
accordance with the terms of the Agreement, and to effect the Amendments and to
consummate the other transactions contemplated by the Agreement.
2. The due organization of Bank as a national banking association and the
valid existence of Bank under the laws of the United States, its power and
authority to own and operate its properties and the possession of all licenses,
permits and authorizations necessary to carry on its business as now conducted.
3. The due incorporation or organization, valid existence and good standing
of each of the subsidiaries of BTX (other than Bank) and any subsidiary of any
such subsidiary listed in Section 2.03 of the Disclosure Schedule, their power
and authority to own and operate their properties, the possession of all
licenses, permits and authorizations necessary to carry on their respective
businesses as now conducted.
4. With respect to BTX, (i) the number of authorized, and issued and
outstanding shares of capital stock of BTX immediately prior to the Closing,
(ii) the nonexistence of any violation of the preemptive or subscription rights
of any person, (iii) the nonexistence of any outstanding options, warrants, or
other rights to acquire, or securities convertible into, any equity security of
BTX (otherwise than as disclosed in the Disclosure Schedule), (iv) the
nonexistence of any obligation, contingent or otherwise, to reacquire any shares
of capital stock of BTX, and (v) the nonexistence of any outstanding stock
appreciation, phantom stock or similar rights.
5. With respect to BTX's subsidiaries, (i) the number of authorized, issued
and outstanding shares of capital stock of such subsidiary immediately prior to
the Closing, (ii) the nonexistence of any violation of the preemptive or
subscription rights of any person, (iii) the nonexistence of any outstanding
options, warrants, or other rights to acquire, or securities convertible into,
any equity securities of any such subsidiary, (iv) the nonexistence of any
obligation, contingent or otherwise, to reacquire any shares of capital stock of
any such subsidiary, and (v) the nonexistence of any outstanding stock
appreciation, phantom stock or similar rights.
6. BTX's valid ownership of and title to all of the issued and outstanding
shares of capital stock of Bank, free and clear of liens, security interests and
encumbrances.
7. The number of authorized, issued and outstanding shares of capital stock
of the subsidiaries listed in Section 2.03 of the Disclosure Schedule, and the
ownership by BTX or Bank of all outstanding shares thereof, free and clear of
any claims, liens, security interests and encumbrances.
8. The due authorization and, when issued to FBI in accordance with the
terms of the Agreement, the valid issuance of the shares of Class B Common Stock
to be issued pursuant to the Stock Purchase, such shares being fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
9. The due and proper performance of all corporate acts and other
proceedings necessary or required to be taken by BTX to authorize the execution,
delivery and performance of the Agreement and the other transactions
contemplated thereby, the due execution and delivery of the Agreement by BTX,
and the Agreement as a valid and binding obligation of the BTX, enforceable
against BTX in accordance with its terms (subject to the provisions of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally from
time to time in effect, and equitable principles relating to the granting of
specific performance and other equitable remedies as a matter of judicial
discretion).
10. The execution of the Agreement by BTX, and the consummation of the
Stock Purchase and the other transactions contemplated therein (including the
Amendments), does not violate or cause a default under its articles of
incorporation or bylaws, or any statute, regulation or rule or any judgment,
order or decree
Ex-1.04(a) - 1
<PAGE> 61
against or any material agreement binding upon BTX (including, without
limitation, its listing agreement with the N.Y.S.E.).
11. The receipt of all required consents, approvals, orders or
authorizations of, or registrations, declaration or filings with or notices to,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, or any other person or entity required
to be obtained or made by BTX, Bank and the other subsidiaries in connection
with the execution and delivery of the Agreement and the Amendments or the
consummation of the transactions contemplated therein.
12. The nonexistence of any material actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting BTX, Bank or
their subsidiaries which, if adversely determined, would have a material adverse
effect upon their respective properties or assets or the transactions
contemplated by the Agreement.
Ex-1.04(a) - 2
<PAGE> 62
EXHIBIT 1.04(B)
FBI LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of FBI under
the laws of the State of Missouri, and its power and authority to enter into the
Agreement and to consummate the Stock Purchase and the other transactions
contemplated thereby.
2. The due and proper performance of all corporate acts and other
proceedings required to be taken by FBI to authorize the execution, delivery and
performance of the Agreement, the due execution and delivery of the Agreement by
FBI, and the Agreement as a valid and binding obligation of FBI, enforceable
against FBI in accordance with its terms (subject to the provisions of
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion).
3. The execution and delivery of the Agreement by FBI, and the consummation
of the transactions contemplated therein, as neither conflicting with, in breach
of or in default under, resulting in the acceleration of, creating in any party
the right to accelerate, terminate, modify or cancel, or violate, any provision
of FBI's articles of incorporation or bylaws, or any statute, regulation, rule,
judgment, order or decree binding upon FBI which would be prohibit or inhibit
the consummation of the Stock Purchase.
4. The receipt of all required consents, approvals, orders or
authorizations of, or registrations, declarations or filings with or without
notices to, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, or any other person or entity
required to be obtained or made by or with respect to FBI in connection with the
execution and delivery of the Agreement or the consummation of the transactions
contemplated thereby.
Ex-1.04(b) - 1
<PAGE> 63
EXHIBIT 4.03(A)
(Exhibit 4.03(a) consists of the Restatement of the Certificate of
Incorporation of BancTEXAS Group Inc. as of , 1994 (as proposed to
be amended at the 1994 Annual Meeting of Stockholders to be held August 18,
1994). Such exhibit is omitted, but the text of the Proposed Certificate of
Incorporation is included as Appendix III to this Proxy Statement.)
<PAGE> 64
EXHIBIT 4.03(B)
AMENDED AND RESTATED
BY-LAWS
OF
BancTEXAS GROUP INC.
ARTICLE I
SECTION 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the stockholders for the
election of directors shall be held in the City of Dallas, State of Texas, at
such place within such city as may be fixed by the Board of Directors. Meetings
of stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual Meetings. An annual meeting of stockholders shall be held
on such day in each fiscal year of the Corporation at such time as may be fixed
by the Board of Directors, at which meeting the stockholders shall elect a Board
of Directors and transact such other business as may properly be brought before
the meeting.
SECTION 3. Notice of Annual Meeting. Written or printed notice of the
annual meeting, stating the place, day and hour thereof, shall be given to each
stockholder entitled to vote thereat at such address as appears on the books of
the Corporation, not less than ten days nor more than sixty days before the date
of the meeting.
SECTION 4. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or the Restated
Certificate of Incorporation, may be called by the Chairman of the Board or by
the President, and shall be called by the President or the Secretary at the
request in writing of a majority of the Board of Directors, or at the request in
writing of stockholders of record owning at least twenty percent in amount of
the entire capital stock of the Corporation issued and outstanding and entitled
to vote at such meeting. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 5. Notice of Special Meetings. Written or printed notice of a
special meeting of stockholders, stating the place, day and hour and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat at
such address as appears on the books of the Corporation, not less than ten days
nor more than sixty days before the date of the meeting.
SECTION 6. Business at Meetings.
(a) Business transacted at all special meetings of stockholders, shall be
confined to the purpose or purposes stated in the notice thereof.
(b) No business may be presented at any annual meeting by a stockholder
unless presented in writing, delivered or mailed by first class United States
mail, postage prepaid, to the Secretary of the Corporation not less than 14 days
nor more than 50 days prior to any annual meeting; provided, however, that if
less than
Ex-4.03(b) - 1
<PAGE> 65
21 days' notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders.
(c) Each notice under subsection (b) shall set forth the issue with
specificity. Discussion at the annual meeting shall be limited to the
description of the proposed issue.
(d) If notice of the proposed issue is not made in accordance with the
foregoing procedure or the proposed issue is not a proper subject for action by
stockholders, the proposed issue shall not be voted on or discussed at the
meeting.
SECTION 7. Stockholder List. At least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of voting shares held by each, shall be prepared by
the Secretary or other officer of the Corporation who shall have charge of its
stock ledger, either directly or through another officer of the Corporation
designated by him or through a transfer agent appointed by the Board of
Directors. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for such ten
day period, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting.
SECTION 8. Quorum. The holders of a majority of the votes attributed to the
shares of capital stock issued and outstanding and entitled to vote thereat,
represented in person or by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided by
statute, the Restated Certificate of Incorporation or these By-laws. The
stockholders present may adjourn the meeting despite the absence of a quorum.
When a meeting is adjourned for less than thirty days in any one adjournment and
a new record date is not fixed for the adjourned meeting, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
When a meeting is adjourned for thirty days or more, or when after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given as in the case of an original meeting.
SECTION 9. Majority Vote. When a quorum is present at any meeting, the vote
of the holders of a majority of the shares having voting power represented in
person or by proxy shall decide any question brought before such meeting, unless
the question is one upon which, by express provision of statute, the Restated
Certificate of Incorporation or these By-laws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
SECTION 10. Proxies. At any meeting of the stockholders, every stockholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such stockholder or his duly
authorized attorney in fact and bearing a date not more than three years prior
to said meeting, unless said instrument provides for a longer period.
SECTION 11. Voting. Unless otherwise provided by statute or the Restated
Certificate of Incorporation, each stockholder shall have one vote for each
share of stock having voting power, registered in his name on the books of the
Corporation; provided, however, that in all elections for directors of the
Corporation, each shareholder shall have the right to cast as many votes in the
aggregate as shall equal the number of voting shares held by him or her in the
Corporation, multiplied by the number of directors to be elected by the class to
which he or she belongs at such election, and each shareholder may cast the
whole number of votes, either in person or by proxy, for one candidate or
distribute them among two or more candidates.
SECTION 12. Conduct of Meetings.
(a) The Chairman of the meeting may, either before or during any meeting of
stockholders, prescribe rules which will govern the orderly conduct,
presentation, discussion, tabling, and voting, including the
Ex-4.03(b) - 2
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procedures for the presentation, revocation and counting of proxies, at the
meeting with respect to issues to be presented at the meeting and all other
aspects of any annual or special meeting of stockholders.
(b) The Chairman's determination shall be in his reasonable discretion and
shall be final, unless the Restated Certificate of Incorporation, By-laws,
resolution of the Board, or applicable law establish rules governing a
particular matter, in which case such provision shall be dispositive, or unless
the Chairman's ruling is overruled by the affirmative vote of the holders of
two-thirds of the issued and outstanding capital stock of the Corporation
entitled to vote on such matters at the meeting and present at the meeting in
person or by proxy.
SECTION 13. Consent of Stockholders in Lieu of Meeting. Any action required
to be taken at any annual or special meeting of stockholders, or any action
which may be taken at any annual or special meeting of stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Powers. The business and affairs of the Corporation shall be
managed by a Board of Directors. The Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute, by the Restated Certificate of Incorporation or these By-laws directed
or required to be exercised or done by the stockholders.
SECTION 2. Number of Directors. The number of directors to constitute the
Board of Directors shall be six; provided, however, that the number of directors
which shall constitute the whole Board shall be fixed from time to time by
resolution of the Board of Directors, provided that such number shall not be
less than three and provided further, that there shall be added to such number
of directors as so fixed any number of directors who are elected solely by the
holders of any class of stock of the Corporation pursuant to the terms of the
constituent instrument establishing such class.
SECTION 3. Election and Term. Except as provided in Section 4 of this
Article III, each director shall be elected to serve until the next annual
meeting and until his successor (if any) shall have been elected and shall
qualify, or until his death, resignation or removal from office.
SECTION 4. Vacancies and Newly Created Directorships. If the office of any
director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, or the number
of directors constituting the whole Board shall be increased, a majority of the
remaining or existing directors though less than a quorum, may choose a
successor or successors or the director or directors to fill the new
directorships, who shall hold office for the unexpired term in respect to which
such vacancy occurred or, in the case of a new directorship or directorships,
until the next annual meeting of the stockholders.
SECTION 5. Removal. The stockholders may remove a director either for or
without cause at any meeting of stockholders, provided notice of the intention
to act upon such matter shall have been given in the notice calling such
meeting.
ARTICLE IV
MEETINGS OF BOARD OF DIRECTORS
SECTION 1. First Meeting. The first meeting of each newly elected Board of
Directors shall be held at the location of and immediately following the annual
meeting of stockholders, and no notice of such meeting
Ex-4.03(b) - 3
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shall be necessary to the newly elected directors in order legally to constitute
the meeting, provided a quorum shall be present; or the Board of Directors may
meet at such place and time as shall be fixed by the consent in writing of all
the directors.
SECTION 2. Other Meetings. The directors of the Corporation may hold their
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 3. Regular Meetings. Regular meetings of the Board of Directors may
be held at such time and place and on such notice, if any, as shall be
determined from time to time by the Board of Directors.
SECTION 4. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board or the President on twenty-four hours'
notice to each director, delivered either personally or by mail or telegram.
Special meetings of the Board of Directors shall be called by the President or
the Secretary in like manner and on like notice on the written request of a
majority of the directors constituting the whole Board of Directors.
SECTION 5. Quorum and Voting. At all meetings of the Board of Directors, a
majority of the directors at the time in office shall be necessary and
sufficient to constitute a quorum for the transaction of business; and the act
of four (4) or more of the directors present at any meeting at which there is a
quorum shall be necessary to constitute the act of the Board of Directors,
except as may be otherwise specifically provided by statute, the Restated
Certificate of Incorporation or these By-laws. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 6. Telephone Meetings. At any meeting of the Board of Directors or
any committee thereof, members may attend by conference telephone, radio,
television or similar means of communication by means of which all persons
participating in the meeting can hear each other, and all members so attending
shall be deemed present at the meeting for all purposes including the
determination of whether a quorum is present.
SECTION 7. Action by Written Consent. Any action required or permitted to
be taken by the Board of Directors or any committee thereof, under the
applicable provisions of the statutes, the Restated Certificate of
Incorporation, or these By-laws, may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the members of the
Board of Directors or committee, as the case may be.
SECTION 8. Advisory Directors. Any number of persons may be appointed
"Advisory Directors" by a vote of a majority of the directors present at any
meeting. An Advisory Director shall have the right to attend and to participate
in any and all meetings of the Board of Directors to the same extent as any
director, except that an Advisory Director shall not have the right to vote on
any question or issue considered by the Board of Directors.
ARTICLE V
COMMITTEES
SECTION 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three or more directors
to constitute an Executive Committee, which Committee, to the extent provided in
such resolution, shall have and may exercise all of the authority of the Board
of Directors in the business and affairs of the Corporation, and may have power
to authorize the seal of the Corporation to be affixed to all papers which may
require it, except where action by the Board of Directors is expressly required
by statute. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required.
SECTION 2. Other Committees. The Board of Directors may similarly create
other committees for such terms and with such powers and duties as the Board of
Directors deems appropriate.
SECTION 3. Committee Rules; Quorum. Each committee may adopt rules
governing the method of calling and time and place of holding its meetings.
Unless otherwise provided by the Board of Directors, a majority of any committee
shall constitute a quorum for the transaction of business, and the act of a
majority
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of the members of such committee present at a meeting at which a quorum is
present shall be the act of such committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
SECTION 1. Attendance Fees. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board of Directors a
fixed sum and expenses of attendance may be allowed for attendance at each
regular or special meeting of the Board; however, this provision shall not
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of committees may receive such
compensation, if any, as may be determined by the Board of Directors.
ARTICLE VII
NOTICES
SECTION 1. Methods of Notice. Whenever any notice is required to be given
to any stockholder, director or committee member under the provisions of any
statute, the Restated Certificate of Incorporation or these By-laws, such notice
shall be delivered personally or shall be given in writing by mail addressed to
such stockholder, director or committee member at such address as appears on the
books of the Corporation, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail with postage
thereon prepaid. Notice to directors and committee members may also be given by
telegram, and notice given by such means shall be deemed to be given at the time
it is delivered to the telegraph office.
SECTION 2. Waiver of Notice. Whenever any notice is required to be given to
any stockholder, director or committee member under the provisions of any
statute, the Restated Certificate of Incorporation or these By-laws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting shall constitute a waiver
of notice thereof except as otherwise provided by statute.
ARTICLE VIII
OFFICERS
SECTION 1. Executive Officers. The executive officers of the Corporation
shall consist of a Chairman of the Board, a President, one or more Vice
Presidents, one or more of whom may be designated Executive or Senior Vice
Presidents and may also have such descriptive titles as the Board of Directors
shall deem appropriate, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Any two or more offices may be held by the
same person except the offices of President and Secretary.
SECTION 2. Election and Qualification. The Board of Directors at its first
meeting after each annual meeting of stockholders may elect a Chairman of the
Board from its members, shall elect a President from its members, and shall
elect one or more Vice Presidents, a Secretary and a Treasurer, none of whom
need be a member of the Board of Directors.
SECTION 3. Other Officers and Agents. The Board of Directors may elect or
appoint Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and such other officers and agents as it shall deem necessary, or
may vest the appointment of any such Assistant Vice Presidents, Assistant
Secretaries and Assistant Treasurers or other officers (except executive
officers) and agents in such of the executive officers as it deems appropriate,
subject in all cases to the control of the Board of Directors.
SECTION 4. Salaries. The salaries of all officers of the Corporation shall
be fixed by the Board of Directors except as otherwise directed by the Board.
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SECTION 5. Term, Removal and Vacancies. The officers of the Corporation
shall hold office until their successors are chosen and qualify. Any officer or
agent of the Corporation may be removed at any time by the affirmative vote of a
majority of the Board of Directors, or by the executive officer having power to
appoint his successor. Any vacancy occurring in any office of the Corporation
may be filled by the Board of Directors or otherwise as provided in this Article
VIII.
SECTION 6. Execution of Instruments. Either the Chairman of the Board or
the President or the Executive Vice President and Chief Financial Officer may
execute in the name of the Corporation bonds, notes debentures and other
evidences of indebtedness, stock certificates, deeds, mortgages, deeds of trust,
indentures, loan and credit agreements, checks, drafts, leases, purchase
contracts, and all other terms of agreements, contracts and instruments and may
bind this Corporation thereto without the seal of this Corporation being affixed
thereon and without the signature of the Chairman of the Board or the President
or Executive Vice President and Chief Financial officer being attested. Any
Senior Vice President may execute in the name of the Corporation any of the
documents and instruments described in the preceding sentence, except where such
documents or instruments are required by these By-laws, by law or by specific
delegation or designation to be otherwise executed. Nothing in this SECTION
shall override the duties and authorities conferred on any officer of this
corporation elsewhere in these By-laws or by any resolution adopted by the Board
of Directors.
SECTION 7. Duties of Officers. The duties and powers of the officers of the
Corporation shall be as provided in these By-laws, or as provided for pursuant
to these By-laws, or (except to the extent inconsistent with these By-laws or
with any provision made pursuant thereto) shall be those customarily exercised
by corporate officers holding such offices.
SECTION 8. Chairman of the Board. The Chairman of the Board shall preside
when present at all meetings of the Board of Directors. He shall advise and
counsel the President and other officers of the Corporation and shall exercise
such powers and perform such duties as shall be assigned to or required of him
from time to time by the Board of Directors. The Chairman of the Board shall, if
so designated by the Board of Directors, be the Chief Executive Officer of the
Corporation; in such event he shall have all of the powers granted by the
By-laws to the President, including the power to make and sign contracts and
agreements in the name and on behalf of the Corporation, and from time to time
may delegate all, or any, of his powers and duties to the President.
SECTION 9. President. Unless such powers have been conferred upon the
Chairman of the Board by the Board of Directors, the President shall have the
powers of Chief Executive Officer of the Corporation, and as Chief Executive
Officer, the President shall have general supervision of the affairs of the
Corporation and shall have general and active control of all of its business.
In the absence of any other person designated thereto by these By-laws, the
President shall preside at all meetings of the stockholders. He shall have
authority to cause the employment or appointment of such employees and agents of
the Corporation as the proper conduct of operations may require, and to fix
their compensation, subject to the provisions of these By-laws; to remove or
suspend any employee or agent who shall have been employed or appointed under
his authority or under authority of any officer subordinate to him; to suspend
for cause, pending final action by the authority which shall have supervisory
power over him, any officer subordinate to the President, and in general, to
exercise all the powers usually appertaining to the office of President of a
corporation, except as otherwise provided in these By-laws. In the event the
Chairman of the Board has been designated Chief Executive Officer of the
Corporation, the President shall, subject to the powers of supervision and
control thereby conferred upon the Chairman of the Board, be the chief operating
officer of the Corporation and shall have all necessary powers to discharge such
responsibility including all powers heretofore in this paragraph enumerated.
The President shall perform all the duties and have all the powers of the
Chairman of the Board in the absence of the Chairman of the Board.
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SECTION 10. Vice Presidents. The Vice Presidents in the order determined by
the Board of Directors shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President, and shall perform
such other duties as the Board of Directors and the Chief Executive Officer may
prescribe.
SECTION 11. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for the purpose and shall
perform like duties for the committees of the Board of Directors when required.
He shall give or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors and the Chief Executive
Officer. He shall keep in safe custody the seal of the Corporation and shall
have authority to affix the same to any instrument requiring it, and when so
affixed it may be attested by his signature. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature.
SECTION 12. Assistant Secretaries. The Assistant Secretaries in the order
determined by the Board of Directors shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such other duties as the Board of Directors and the Chief Executive
Officer may prescribe.
SECTION 13. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Board of Directors and the Chief Executive Officer, whenever they
may require it, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation.
SECTION 14. Assistant Treasurers. The Assistant Treasurers in the order
determined by the Board of Directors shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as the Board of Directors and the Chief Executive
Officer may prescribe.
ARTICLE IX
SHARES AND STOCKHOLDERS
SECTION 1. Certificates Representing Shares. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board or the President or a Vice
President and the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation. The signature of any such officer may be facsimile if
the certificate is countersigned by a transfer agent or registered by a
registrar, other than the Corporation itself or an employee of the Corporation.
In case any officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of its issuance. If the Corporation shall
be authorized to issue more than one class of stock or more than one series of
any class, the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock, provided, that, except as otherwise provided in Section 202 of the
General Corporation Law of the State of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each stockholder
who so requests the designations, preferences and relative, participating,
option or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Ex-4.03(b) - 7
<PAGE> 71
SECTION 2. Transfer of Shares. Subject to valid transfer restrictions and
to stop-transfer restrictions and to stop-transfer orders directed in good faith
by the Corporation to any transfer agent to prevent possible violations of
federal or state securities laws, rules or regulations, or for any other lawful
purpose, upon surrender to the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 3. Fixing Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversions or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, or more than sixty days prior to any other action. If no record
date is fixed, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held; the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which first
written consent is expressed; and the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 4. Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of any share or shares to receive dividends, and to vote as such owner, and for
all other purposes as such owner; and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
ARTICLE X
INDEMNIFICATION
SECTION 1. Indemnification.
(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another
Ex-4.03(b) - 8
<PAGE> 72
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a person who is or was a director, officer, employee
or agent of the Corporation, or a person who is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or another enterprise, has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b), or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee,
agent or other person is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding, or a threatened action, suit or proceeding, may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee,
agent or other person to repay the such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article X.
(f) The indemnification provided by this Article X shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement or vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(g) The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article X.
(h) For purposes of this Article X, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article X with
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
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ARTICLE XI
GENERAL
SECTION 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Restated Certificate of Incorporation, if any,
or of the resolutions, if any, providing for any series of stock, may be
declared by the Board of Directors at any meeting thereof, or by the Executive
Committee at any meeting thereof. Dividends may be paid in cash, in property, or
in shares of the capital stock of the Corporation, subject to the provisions of
the Restated Certificate of Incorporation or the resolutions, if any, providing
for any series of stock.
SECTION 2. Reserves. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, deem proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose or purposes as the directors shall think conducive to the interests of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 3. Shares of Other Corporations. The President, or in his absence,
any Vice President, is authorized to vote, represent and exercise on behalf of
the Corporation all rights incident to any and all shares of any other
corporation, bank, banking association or other entity standing in the name of
the Corporation. The authority herein granted to said officer may be exercised
either by said officer in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officer. Notwithstanding the above,
however, the Board of Directors, in its discretion, may designate by resolution
any additional person to vote or represent said shares of other corporations,
banks, banking associations and other entities.
SECTION 4. Checks. All checks, drafts, bills of exchange or demands for
money of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
SECTION 5. Corporate Records. The Corporation shall keep at its registered
office or principal place of business or at the office of its transfer agent or
registrar, a record of its stockholders giving the names and addresses of all
stockholders and the number and class and series, if any, of shares held by
each. All other books and records of the Corporation may be kept at such place
or places within or without the State of Delaware as the Board of Directors may
determine.
SECTION 6. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation. The seal may be used by causing it or a facsimile thereof to
be impressed, affixed or reproduced.
SECTION 7. Fiscal Year. The fiscal year of the Corporation shall be fixed
by the Board of Directors; if not so fixed it shall be the calendar year.
ARTICLE XII
AMENDMENTS
SECTION 1. Amendment. These By-laws may be altered, amended or repealed or
new By-laws may be adopted at any annual meeting of the stockholders or at any
special meeting of the stockholders at which a quorum is present or represented,
by the affirmative vote of the holders of a majority of the shares entitled to
vote at such meeting and present or represented thereat, or, with the
affirmative vote of the holders of a majority of the shares of the Class B
Common Stock, by the affirmative vote of a majority of the whole Board of
Directors at any regular meeting of the Board, or at any special meeting of the
Board, provided notice of the proposed alteration, amendment or repeal or the
adoption of the new By-laws is set forth in the notice of such meeting.
Ex-4.03(b) - 10
<PAGE> 74
APPENDIX II
(McKENNA & COMPANY LETTERHEAD)
July 11, 1994
The Board of Directors
BancTEXAS Group Inc.
13747 Montfort Drive, Suite 300
Dallas, Texas 75240
Gentlemen:
You have requested our opinion as to the fairness from a financial
point of view, to the stockholders ("Stockholders") of BancTEXAS
Group Inc. ("BancTEXAS"), of the proposed issuance to First Banks,
Inc. ("First Banks") of Class B Common Stock (the "Stock
Purchase") pursuant to the terms and subject to the conditions as
set forth in the Stock Purchase and Operating Agreement dated as
of May 19, 1994 (the "Agreement"), between BancTEXAS and First
Banks.
The Agreement provides that First Banks will purchase 37,500,000
shares of BancTEXAS Class B Common Stock for $30,000,000 or $.80
per share. Class B Common Stock will not be convertible into
BancTEXAS Common Stock for five years, will have no trading market
liquidity, will be subject to restrictions on transferability and
will carry certain additional conditions and privileges as
outlined in the Agreement.
In arriving at our opinion, we have reviewed the Agreement and
have met with certain senior officers and other representatives of
BancTEXAS and First Banks to discuss the business, operations and
prospects of BancTEXAS and First Banks. We have examined certain
publicly available business and financial information relating to
BancTEXAS and First Banks which was provided to us by BancTEXAS
and First Banks. We have reviewed the terms of the Stock Purchase
as set forth in the Agreement in relation to, among other things:
current and historical market prices and trading volume of
BancTEXAS Common Stock; BancTEXAS' earnings, book value, return on
assets, return on equity and equity to assets ratio; the
historical growth rates of BancTEXAS and the capitalization and
financial condition of BancTEXAS and First Banks. We have also
considered, to the extent publicly available, the financial terms
of certain other recent business combinations involving companies
whose operations we considered comparable to those of BancTEXAS.
In addition to the foregoing, we have conducted such other
analyses and examinations, and have considered such other
financial, economic and market criteria as we deemed necessary in
arriving at our opinion. In our review, we have assumed and relied
upon without independent verification the accuracy and
completeness of the financial and other information publicly
available or furnished to us by BancTEXAS and First Banks.
<PAGE> 75
July 11, 1994
The Board of Directors
BancTEXAS Group Inc.
Page 2
Our opinion, as set forth herein, relates to the Stock Purchase
only. We are not making a recommendation to any Stockholder as to
how any Stockholder should vote on the Stock Purchase. We are not
expressing any opinion as to what the value of BancTEXAS' Regular
Common Stock actually will be when the Class B Common Stock is
issued to First Banks pursuant to the Agreement or the price at
which BancTEXAS' Regular Common Stock will trade subsequent to the
Agreement. We have not made an independent evaluation or appraisal
of the capital stock, assets or liabilities of BancTEXAS or First
Banks nor were such evaluations or appraisals provided to us, nor
have we made any physical inspection of the properties or assets
of BancTEXAS or First Banks. We have not been asked to consider
and our opinion does not address the relative merits of the Stock
Purchase as compared to any alternative business strategies that
might exist for BancTEXAS or the effect of any other business
combination in which BancTEXAS might engage. We were not requested
to seek and have not sought other offers which are competitive
with the terms of the Stock Purchase; however, we have
participated as financial advisor on behalf of BancTEXAS in a
number of negotiations with potential acquisition partners and
equity investors over the past two years. Our opinion herein is
based upon circumstances existing and disclosed to us as of the
date hereof.
McKenna & Company has been engaged to deliver an opinion in
connection with the Stock Purchase and will receive a fee upon
delivery of this opinion and a subsequent fee at the closing of
the Stock Purchase. McKenna & Company has provided investment
banking services to BancTEXAS in the past and may continue to do
so in the future.
Based upon and subject to the foregoing, our experience as
investment bankers, our work described above and other factors we
have deemed relevant, we are of the opinion that as of the date
hereof the terms of the Stock Purchase pursuant to the Agreement,
when taken as a whole, are fair from a financial point of view to
the Stockholders of BancTEXAS.
Very truly yours,
/s/ McKENNA & COMPANY
McKenna & Company
<PAGE> 76
APPENDIX III
RESTATEMENT
OF
THE
CERTIFICATE OF INCORPORATION
OF
BANCTEXAS GROUP INC.
AS OF
, 1994
Pursuant to the provisions of Section 245 of the General Corporation Law of
the State of Delaware, the undersigned, BANCTEXAS GROUP INC., a Delaware
corporation (the "Corporation"), incorporated on January 25, 1978, hereby amends
and restates its Restated Certificate of Incorporation as follows:
1. The present name of the corporation is BancTexas Group Inc. The name
under which the corporation was originally organized was Commerce Southwest Inc.
2. An Amendment to the Restated Certificate of Incorporation of the
Corporation and this Restatement of the Certificate of Incorporation of the
Corporation was adopted by the Corporation's stockholders on , 1994,
to become immediately effective upon the filing of this Restatement of the
Certificate of Incorporation of the Corporation with the office of the Delaware
Secretary of State.
3. The Certificate of Incorporation of the Corporation is hereby restated
in its entirety to read as follows:
FIRST: The name of the Corporation is BancTEXAS Group Inc.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: (A) The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is one hundred
sixty-three million (163,000,000) shares consisting of (a) three million
(3,000,000) shares of a class designated as Preferred Stock, par value
$1.00 per share ("Preferred Stock"), (b) one hundred million (100,000,000)
shares of a class designated Common Stock, par value $.01 per share
("Common Stock"), and (c) sixty million (60,000,000) shares of a class
designated Class B Common Stock, par value $0.01 per share ("Class B Common
Stock").
(B) The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock, the Common Stock, and the
Class B Common Stock are as follows:
1. Provisions Relating to the Preferred Stock. Shares of Preferred Stock
may be issued in one or more series as determined from time to time by the Board
of Directors. All shares of any one series of Preferred Stock will be identical,
except as to the dates of issue and the dates from which dividends on shares of
the series issued on different dates will cumulate, if dividends on the shares
of such series are cumulative. Authority is hereby expressly granted to the
Board of Directors to authorize the issuance of one or more series of Preferred
Stock, and to fix by one or more resolutions providing for the issuance of each
such series the voting powers, designations, preferences and relative,
participating, optional, redemption, conversion, exchange or other special
rights, qualifications, limitations or restrictions of such series, and the
number of shares in such series, to the full extent now or hereafter permitted
by law.
<PAGE> 77
2. Provisions Relating to the Common Stock and the Class B Common Stock.
(a) General. Except as otherwise provided herein, or as otherwise
provided by applicable law, all shares of Common Stock and Class B Common
Stock shall have identical rights and privileges in every respect.
(b) Voting. The Common Stock and the Class B Common Stock shall each
be fully voting stock entitled to one vote per share with respect to the
election of directors and for all other purposes. The holders of Common
Stock and Class B Common Stock shall, unless otherwise required by law or
by another provision of this Certificate of Incorporation, vote as a single
class on all matters. In all elections for directors of the Corporation,
each stockholder shall have the right to cast as many votes in the
aggregate as shall equal the number of voting shares held by such
stockholder in the Corporation, multiplied by the number of Directors to be
elected by the class to which such stockholder belongs at such election,
and each stockholder may cast the whole number of votes, either in person
or by proxy, for one candidate or distribute them among two or more
candidates.
(c) Dividends. Subject to the limitations prescribed herein, holders
of Common Stock and Class B Common Stock shall participate equally in any
dividends (whether payable in cash, stock or property) when and as declared
by the board of directors of the Corporation out of the assets of the
Corporation legally available therefor and the Corporation shall treat the
Common Stock and Class B Common Stock identically in respect of any
subdivisions or combinations (for example, if the Corporation effects a
two-for-one stock split with respect to the Common Stock, it shall at the
same time effect a two-for-one stock split with respect to the Class B
Common Stock); provided, however, that (i) with respect to dividends
payable in cash by the Corporation, the holders of Class B Common Stock
shall participate equally per share only if and to the extent such cash
dividends exceed $0.03 per share on the Common Stock per calendar year (for
example, if the board of directors declares and the Corporation pays a
dividend of $0.05 per share of Common Stock for a given calendar year,
holders of Class B Common Stock shall be entitled to a dividend of $0.02
per share); and (ii) dividends payable in shares of Common Stock (or rights
to subscribe for or purchase shares of Common Stock or securities or
indebtedness convertible into shares of Common Stock) shall be paid only on
shares of Common Stock and dividends payable in shares of Class B Common
Stock (or rights to subscribe for or purchase shares of Class B Common
Stock or securities or indebtedness convertible into shares of Class B
Common Stock) shall be paid only an shares of Class B Common Stock (for
example, if the board of directors declares and the Corporation pays a five
percent (5%) stock dividend on the Common Stock, payable in shares of
Common Stock, at the same time the board of directors shall declare and the
Corporation shall pay a five percent (5%) stock dividend on the Class B
Common Stock payable in shares of Class B Common Stock).
(d) Liquidation. In the event the Corporation is liquidated, dissolved
or wound up, whether voluntarily or involuntarily, the holders of the
Common Stock and the Class B Common Stock shall participate equally in any
distribution.
(e) Voluntary Conversion of Class B Common Stock.
(i) Conversion Rights. Each share of Class B Common Stock may be
converted into one (1) share of Common Stock at the option of any holder
thereof at any time after the fifth (5th) anniversary of the date of its
issuance by the Corporation. For the foregoing purpose, a share of Class
B Common Stock issued as a stock dividend or pursuant to a stock split,
reclassification or other combination, shall be deemed to have been
issued on the date of the share of Class B Common Stock with respect to
which it is so issued.
(ii) Conversion Procedures. Any holder of Class B Common Stock
desiring to exercise such holder's option to convert such Class B Common
Stock in accordance with the foregoing shall surrender the certificate
or certificates representing the Class B Common Stock to be converted,
duly endorsed to the Corporation or in blank, at the principal executive
office of the Corporation, and shall give written notice to the
Corporation at such office that such holder elects to convert the number
of shares represented by such certificate or certificates, or a
specified number thereof. As
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<PAGE> 78
promptly as practicable after the surrender for conversion of any
Class B Common Stock, the Corporation shall execute and deliver or
cause to be executed and delivered to the holder of such Class B Common
Stock certificates representing the shares of Common Stock issuable
upon such conversion. In case any certificate or certificates
representing shares of Class B Common Stock shall be surrendered for
conversion for only a part of the shares represented thereby, the
Corporation shall execute and deliver to the holders of the certificate
or certificates for shares of Class B Common Stock so surrendered a new
certificate or certificates representing the shares of Class B Common
Stock not converted, dated the same date as the certificate or
certificates representing the Common Stock. Shares of the Class B
Common Stock converted as aforesaid shall be deemed to have been
converted immediately prior to the close of business on the date such
shares are duly surrendered for conversion, and the person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the recordholder or
holders of such shares of Common Stock as of such date.
(iii) Recapitalization, Consolidation, or Merger of the
Corporation. In the event that the Corporation shall be recapitalized,
consolidated with, or merged with or into any other corporation (a
"Reorganization") and the terms thereof shall provide (i) that the Class
B Common Stock shall remain outstanding after such Reorganization and
(ii) for any change in or conversion of the Common Stock, then the terms
of such Reorganization shall include a provision to the effect that each
share of Class B Common Stock after such Reorganization shall thereafter
be entitled to receive upon conversion the same kind and amount of
securities or assets as shall be distributable upon such Reorganization
with respect to one share of Common Stock.
(iv) Reservation of Shares. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of
Class B Common Stock as herein provided, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Class B Common Stock and shall take all
such corporate action as may be necessary to assure that such shares of
Common Stock may be validly and legally issued upon conversion of all of
the outstanding shares of Class B Common Stock; and if, at any time the
number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Class B Common Stock, the
Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(v) Retirement of Shares. Shares of Class B Common Stock which have
been issued and have been converted into Common Stock, repurchased, or
reacquired in any other manner by the Corporation shall not be reissued.
(f) Mandatory Conversion of Class B Common Stock. If, at any time
while there are shares of Class B Common Stock issued and outstanding, it
shall be determined by the board of directors, in its sole discretion, that
legislation or regulations are enacted or any judicial or administrative
determination is made which would prohibit the listing, quotation or
trading of the Common Stock on the New York Stock Exchange or the National
Association of Securities Dealers Automated Quotation System, or would
otherwise have a material adverse effect on the Corporation, in any such
case due to the Corporation having more than one class of common shares
outstanding, then the board of directors may by resolution convert all
outstanding shares of Class B Common Stock into shares of Common Stock on a
share-for-share basis. To the extent practicable, notice of such conversion
of Class B Common Stock specifying the date fixed for said conversion shall
be mailed, postage pre-paid, at least ten (10) days but not more than
thirty (30) days prior to said conversion date to the holders of record of
Common Stock and Class B Common Stock at their respective addresses as the
same shall appear on the books of the Corporation; provided, however, that
no failure or inability to provide such notice shall limit the authority or
ability of the board of directors to convert all outstanding shares of
Class B Common Stock into shares of Common Stock. Immediately prior to the
close of business on said conversion date (or, if said conversion date is
not a business day, on the next succeeding business day) each outstanding
share of Class B Common Stock shall thereupon automatically be converted
into a share of Common Stock and
3
<PAGE> 79
each certificate theretofore representing shares of Class B Common Stock
shall thereupon and thereafter represent a like number of shares of
Common Stock.
(g) Class Voting Under Certain Circumstances. None of the provisions
hereof affecting the powers, preferences, rights, qualifications,
limitations or restrictions of the Class B Common Stock may be amended or
repealed unless, in addition to any other vote required by law or this
Certificate of Incorporation, such amendment shall be approved by the
affirmative vote of the holders of a majority of the shares of the Common
Stock then outstanding, voting as a separate class.
3. General. Subject to the foregoing provisions of this Certificate of
Incorporation, the Corporation may issue shares of its Preferred Stock, Common
Stock, and Class B Common Stock from time to time for such consideration (not
less than the par value thereof) as may be fixed by the board of directors of
the Corporation, which is expressly authorized to fix the same in its absolute
and uncontrolled discretion, subject to the foregoing conditions. Shares so
issued for which the consideration shall have been paid or delivered to the
Corporation shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not be
liable for any further payments in respect of such shares.
FIFTH: The Corporation shall have perpetual existence.
SIXTH: The number of directors of the Corporation shall be fixed in the
By-laws.
SEVENTH: The Board of Directors of the Corporation shall have power to
make, alter or repeal the By-Laws of the Corporation only with the prior
approval of the holders of a majority of the shares of Class B Common Stock,
subject to such restrictions upon the exercise of such power as may be imposed
by the stockholders in any By-Laws adopted by them from time to time.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in the Certificate of Incorporation or any
amendment thereof in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
NINTH:
(A) Whereby under the laws of the State of Delaware a vote of stockholders
is required to approve or authorize any of the transactions set forth below,
then the affirmative vote or consent of 75% of the capital stock of this
Corporation entitled to vote in elections of directors, voting as a single
class, shall be required to authorize or approve such transactions:
(1) a merger or consolidation with or into any other corporation, or
(2) any sale, lease or exchange of all or substantially all of the
property and assets of this Corporation to any other corporation, person or
other entity, or
(3) any purchase or lease of all or substantially all of the assets of
any corporation, person or other entity by this Corporation, or
(4) any combination of the outstanding shares of Common Stock of this
Corporation into a smaller number of shares,
if as of the record date for the determination of stockholders entitled to
notice thereof and to vote thereon or consent thereto (i) such other
corporation, person or entity which is a party to a transaction described in
clauses (1), (2) or (3) above is the beneficial owner, directly or indirectly,
of at least 5% of the total outstanding shares of stock of this Corporation
entitled to vote in elections of directors, considered for this purpose as one
class, or (ii) any combination of the outstanding shares of Common Stock into a
smaller number of shares as described in clause (4) above is proposed, directly
or indirectly, by a person, corporation or entity which is the beneficial owner,
directly or indirectly, of at least 5% of the total outstanding shares of stock
of this Corporation entitled to vote in elections of directors, considered for
this purpose as one class. Such affirmative vote or consent shall be in addition
to the vote or consent of the holders of the stock of this Corporation otherwise
required by law or any agreement between this Corporation and any national
securities exchange.
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<PAGE> 80
(B) For purposes of this Article Ninth any corporation, person or other
entity shall be deemed to be the beneficial owner of any shares of stock of this
Corporation.
(1) which it owns directly, whether or not of record, or
(2) which it has the right to acquire pursuant to any agreement or
understanding or upon exercise of conversion rights, warrants, options or
otherwise, or
(3) which are beneficially owned, directly or indirectly (including
shares deemed to be owned through application of clause (2) above), by any
affiliate (a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or is under common control
with any such corporation, person or other entity) or associate (any
corporation or organization of which such person is an officer or partner
or is, directly or indirectly, the beneficial owner of 10% or more of any
class of equity security; any trust or other estate in which such person
has a substantial beneficial interest or as to which such person serves as
trustee or in a similar fiduciary capacity; and any relative or spouse of
such person or any relative of such spouse, who has the same home as such
person or who is a director or officer of the corporation or any of its
parents or subsidiaries), or
(4) which are beneficially owned, directly or indirectly (including
shares deemed owned through application of clause (2) above), by any other
corporation, person or entity with which it or its affiliate or associates
(as such terms are defined in clause (3) above) has any agreement or
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of stock of this Corporation.
For the purposes of this Article Ninth, the total outstanding shares of any
class of stock of this Corporation shall be deemed to include shares owned
through the application of clauses (B)(2), (3) and (4) above for the purposes of
calculating the percentage of ownership of such corporation, person, or other
entity, but shall not be deemed to include any other shares which may be
issuable pursuant to any agreement or upon exercise of conversion rights,
warrants, options or otherwise.
(C) The Board of Directors shall have the power and duty to determine for
the purpose of this Article Ninth on the basis of information known to this
Corporation, whether
(1) such other corporation, person or other entity beneficially owns
more than 5% of the total outstanding shares of stock of this Corporation
entitled to vote in elections of directors,
(2) a corporation, person, or entity is an "affiliate" or "associate"
(as defined in paragraph (B) above) of another, and
(3) the memorandum of understanding referred to in paragraph (D)(1)
below is substantially consistent with the transaction covered thereby.
Any such determination shall be conclusive and binding for all purposes of
this Article Ninth.
(D) The provisions of this Article Ninth shall not apply to
(1) any merger or similar transaction with any corporation, if the
Board of Directors of this Corporation has approved a memorandum of
understanding with such other corporation with respect to such transaction
prior to the time that such other corporation shall have become a
beneficial owner of 5% or more of the total outstanding shares of stock of
this Corporation entitled to vote in elections of directors; or
(2) any merger or consolidation of this Corporation with, or any sale
or lease to this Corporation or any subsidiary thereof of any assets of, or
any sale or lease by this Corporation or any subsidiary thereof of any
assets to, any corporation of which a majority of the outstanding shares of
all classes of stock entitled to vote in elections of directors of such
corporation is owned of record or beneficially by this Corporation and its
subsidiaries.
(E) Except as may be otherwise provided by this Article Ninth, or required
by statute, an agreement of merger or consolidation may be approved by a
majority vote of the shares issued and outstanding, taken at a meeting called
for the purpose of such approval.
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<PAGE> 81
(F) Notwithstanding any other provision of this Certificate of
Incorporation or by the By-Laws of this Corporation (and in addition to any
other vote that may be required by law, this Certificate of Incorporation or the
By-Laws of this Corporation) the affirmative vote of 75% of the capital stock of
this Corporation entitled to vote in elections of directors, voting as a single
class, shall be required to amend, alter, change, or repeal this Article Ninth.
TENTH: No director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director shall be liable under
Section 174 of the Delaware General Corporation Law or any amendment thereto or
successor provision thereto or shall be liable by reason that, in addition to
any and all other requirements for such liability, he (i) shall have breached
his duty of loyalty to the Corporation or its stockholders, (ii) shall not have
acted in good faith, (iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law or
(iv) shall have derived an improper personal benefit. Neither the amendment nor
repeal of Article Tenth, nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Article Tenth, shall eliminate or reduce
the effect of this Article Tenth in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article Tenth, would accrue or
arise prior to such amendment, repeal or adoption of an inconsistent provision.
IN WITNESS WHEREOF, said BancTEXAS Group Inc. has caused this Certificate
to be duly executed this day of , 1994.
BancTEXAS Group Inc.
By:
Nathan C. Collins
Chairman of the Board of
Directors,
President and Chief Executive
Officer
ATTEST:
By:
Richard H. Braucher
Senior Vice President and
Secretary
6
<PAGE> 1
Exhibit 5(c)
FIRST BANKS, INC.
(Transactions Effected Within Past 60 Days)
<TABLE>
<CAPTION>
Identity of Number of Price per
Purchaser Date of Purchase Shares Purchased Share
- ----------- ---------------- ---------------- ---------
<S> <C> <C> <C>
First Banks, Inc. August 31, 1994 37,500,000 $0.80
</TABLE>
